Explore Metaplanet's 35x stock surge via Bitcoin strategy with CEO Simon Gerovich. Insights on MNAV, BTC yield, and Japan's crypto future in this exclusive interview.
Timestamped Overview
[00:00:00 - 00:03:53] Introduction and Background
- Host highlights Metaplanet’s rapid stock growth and top global performance.
- Simon Gerovich introduced as CEO, with background in Harvard, Goldman Sachs, and founding Red Planet hotels.
- Discussion on acquiring and rebranding the company to Metaplanet.
- Simon shares his love for Japan from childhood diplomatic posting.
- Pivot to Bitcoin strategy inspired by challenges and Michael Saylor.
[00:03:53 - 00:06:50] Bitcoin Treasury Strategy Explained
- Metaplanet as the fastest-growing stock globally in 2024 with 2400% returns.
- Bitcoin treasury company defined: acquire max Bitcoin for shareholders.
- Inspiration from Michael Saylor’s playbook post-COVID hotel struggles.
- Process of evaluating investments led to Bitcoin as best store of value.
- Positive market reception upon announcement and shareholder approval.
[00:06:50 - 00:09:23] Company Growth and Market Impact
- Stock up 3400% amid Bitcoin’s 150% rise; no expectation of $2B market cap.
- Rise of 70+ companies adopting Bitcoin strategies globally.
- Japan’s high Bitcoin tax (55%) makes Metaplanet a tax-efficient vehicle.
- Investors use retirement accounts for 0% tax on Metaplanet shares.
- Government push for investments via new retirement products.
[00:09:23 - 00:14:02] Valuation Metrics: MNAV and BTC Yield
- MNAV: Market cap or enterprise value over Bitcoin holdings.
- Higher MNAV enables accretive dilution for more Bitcoin acquisition.
- BTC yield: Change in Bitcoin per share; key for assessing dilution.
- Traditional finance views dilution negatively, but welcomed in Bitcoin space.
- Select companies with high MNAV for faster Bitcoin growth.
[00:14:02 - 00:18:19] Strategy Reflections and Execution
- No major changes to strategy; executed well despite Japan dilution limits.
- Thoughtful share sales to avoid harming shareholders.
- MNAV fluctuations tied to Bitcoin buys and share price.
- Compression from dilution increases value long-term.
- Lesson: High initial MNAV enabled aggressive Bitcoin accumulation.
[00:18:19 - 00:21:46] New Metrics and Aggression
- Adam Back’s “months to MNAV cover”: MNAV divided by BTC yield, annualized.
- Measures growth speed justifying premiums; Metaplanet tops at 2.5 months.
- Represents aggression in Bitcoin accumulation.
- Need multiple data points to value new companies like 21 Capital.
- Factors include capital raising methods driving fair valuations.
[00:21:46 - 00:27:19] Financing Tools and Capital Raising
- Interest from banks for structures like convertible bonds (CBs).
- High volatility attractive for CBs, but prefer permanent capital.
- Phase one focus: Equity to build balance sheet before debt.
- Excited about preferred shares in yield-starved Japan.
- Target outright investors; avoid heavy shorting from hedge funds.
[00:27:19 - 00:32:25] Industry Guidance and Competition
- Frequent inquiries for strategy advice; share best practices selectively.
- Distinguish genuine Bitcoin believers from opportunists.
- Support from UTXO Management; upcoming US deals.
- Board includes Tyler Evans, David Bailey, Eric Trump.
- View competition positively; Bitcoin community elevates all.
[00:32:25 - 00:36:22] Bitcoin Outlook and Institutional Interest
- Bullish on Bitcoin due to demand vs. limited supply.
- Urgency to accumulate before unaffordability.
- Institutional investors like Capital Group, Norges Bank focus on growth.
- They encourage fast dilution for Bitcoin per share increase.
- Not fixated on MNAV; value rapid accumulation.
[00:36:22 - 00:39:50] Japan Market and Personal Allocation
- Potential Bitcoin ETF in Japan; would onboard more users.
- NISA accounts limit ~$16K/year at 0% tax.
- Hope for lower direct Bitcoin taxes to expand market.
- Personal allocation: Sold assets for Bitcoin/Metaplanet shares.
- Advise allocating all to Bitcoin as superior store of value.
Notable Quotes
Bitcoin Treasury Strategy
A Bitcoin treasury company has a single purpose, and that is to acquire as much Bitcoin as possible, to accrete more Bitcoin onto the balance sheet on behalf of all shareholders.
Simon Gerovich @gerovich
Dilution in Bitcoin Land
We are wired in traditional finance to think that dilution is bad... That isn't the case in Bitcoin treasury land. Shareholders and investors, they welcome dilution.
Simon Gerovich @gerovich
Valuation Metrics
The higher the multiple, higher MNAV that you have, the easier it is for you to be able to raise capital with limited dilution.
Simon Gerovich @gerovich
Months to MNAV Cover
If you pay three times multiple for a company like ours, it's justified because we can make it all back in two months.
Simon Gerovich @gerovich
Personal Allocation
All I want to do now is just own Bitcoin. I see no better store value over the long term than Bitcoin.
Simon Gerovich @gerovich
Japan's Bitcoin Potential
There are millions of Japanese that love Bitcoin, that want to learn more about Bitcoin... We have a big goal ahead of us, really, to onboard the next million people into Bitcoin in Japan.
Simon Gerovich @gerovich
Institutional Investors
We've seen so many new institutional investors begin to buy our shares... We're uniquely positioned in Asia as being able to give asset allocators exposure to the Bitcoin treasury strategy.
Simon Gerovich @gerovich
Competition in Bitcoin
Bitcoin is different to the traditional world, which is a doggy dog world... Everyone wants to elevate each other. You share your best practices.
Simon Gerovich @gerovich
Bitcoin Outlook
I'm incredibly bullish on Bitcoin. I think fair value is much, much higher than where we are now.
Simon Gerovich @gerovich
MNAV Insights
One of the most important metrics we talk about is MNAV.
Richard Byworth @richardbyworth
Transcript
Richard Byworth [00:00:00]: So you were the fastest growing company I think in the world last year in stock market returns. That puts you in the number one position. This year you’re actually also of those top 15, 20 companies You’re also the top performer of them this year
Simon Gerovich [00:00:18]: so far. Sometimes I’m pinching myself, but it doesn’t seem real. This is just the beginning. I can’t feel more optimistic about this category of company than any other category of company out there. And this is relatively new because traditional finance values companies in general and they don’t have the tools yet. Your company stock is up 3,400%. We are wired in traditional finance to think that dilution is bad. If a company is selling 20% new shares, all of a sudden you think the share price should fall 20% to account for that dilution. That isn’t the case in Bitcoin treasury land. I was very surprised at that time that no one else had done that. Do this and then you’ll perform as well as we have.
Richard Byworth [00:01:15]: I have spent countless hours diving into Bitcoin treasury companies, MNAV metrics, and what it takes for a company to thrive on a Bitcoin standard. So I am thrilled to welcome Simon Jerovich, president and CEO of MetaPlanet, to the show. He’s often compared to Michael Saylor’s strategy, or MSTR, and MetaPlanet has become a standout in the Bitcoin treasury space, delivering an astonishing 35X return for shareholders in just one year. Simon founded the Japanese company seven years ago that last year skyrocketed to become the top performing stock globally simply by embracing a Bitcoin focused strategy. He’s a Harvard graduate with a degree in applied mathematics. Simon previously worked as a derivatives trader at Goldman Sachs in Asia. He co-founded Red Planet, the Asian hotel chain, and under his leadership, MetaPlanet has transformed into a Bitcoin powerhouse, now holding around 7,000 Bitcoin. For those tracking Bitcoin treasury stocks, MetaPlanet is an absolute must watch in the global allocation landscape. So let’s dive in. Simon, welcome to FeffaCon in Switzerland. It’s a pleasure to be here. Thank you for having me. Yeah, very excited to get you on the show. Obviously, you and I do talk occasionally. And, you know, I spent a lot of my career in Japan, but maybe just for the audience, and maybe tell people about who you are, what you do, and how you got here with MetaPlanet.
Simon Gerovich [00:02:43]: Sure. I am the president of MetaPlanet. We’re listed on the Tokyo Stock Exchange. I’ve been associated with the company now for the past 10 years. We originally acquired the company when I was running a hotel business. We realized when we entered Japan that in order to get financing from Japanese banks to be taken seriously, by potential investors to be a public company would be very useful. And so we acquired a majority stake in a company at that time, and then we rebranded it to become Red Planet Japan, which was our Pan-Asian budget hotel platform. Japan is a place that I have Loved for a long time. My father was a diplomat and we were posted to Japan in the mid to late 80s at a time when Japan was number one. I do hope Japan becomes number one again sometime soon, but always wanted to, you know, after college, return to Japan and live and work there. So it’s an absolute pleasure now to be running MetaPlanet, which is effectively the company that we had before, which we rebranded and repivoted to MetaPlanet last
Richard Byworth [00:03:53]: year. So you were the fastest growing company, I think in the world last year in stock market returns, you did 2024, 2400% if my date is correct. That puts you in the number one position. And I think you were just showing me some numbers that this year, You’re actually also of those top 15, 20 companies. You’re also the top performer of them this year so far. You’re a Bitcoin strategy company, maybe for people that don’t necessarily understand what a Bitcoin strategy or Bitcoin treasury company is. Can you just maybe give an understanding of that?
Simon Gerovich [00:04:34]: Sure.
Richard Byworth [00:04:34]: So a
Simon Gerovich [00:04:35]: Bitcoin treasury company has a single purpose, and that is to acquire as much Bitcoin as possible, to accrete more Bitcoin onto the balance sheet on behalf of all shareholders. It is not something that we came up with. We were inspired by strategy in the US, and we decided to adopt the same plan a little over a year ago. after really looking at limited options that were available to us as a struggling hotel company. And so I went through a very similar process that Michael Saylor went through. And many people who have listened to his early podcasts would know that he went through this process of figuring out what to do with the cash on his balance sheet, worrying that those dollars would lose value with every minute that passes. And after looking at literally every possible investment opportunity out there concluded that Bitcoin was the best asset to purchase and be something that stores value over the long term. And so we went through a very, very similar process coming into COVID. We were at the top of the world prior to COVID. We had grown our hotel platform to 30 hotels in Thailand, Philippines, Indonesia, and then Japan. And then literally with a single health, global health scare, health issue, we went from kind of top of the world to struggling to survive. And so going through about 12, 18 months of that, we had to look at our own existential crisis and figure out how to to mitigate that. And that’s when we decided that Bitcoin was the path forward. Michael Saylor had made it really easy for public companies all around the world really to follow a playbook. And I was very surprised at that time that no one else had done that. It was really just a guidebook, do this and then you’ll perform as well as we have. And so I had nothing but confidence when we made the pivot. Of course, when we announced that we were doing that, the stock immediately performed well. And so that was something that gave comfort to our board and also to shareholders. And so by the time we had our shareholder meeting to formally make that change, it was obvious that it was something that was well received by the public markets.
Richard Byworth [00:06:50]: Yeah, I think you timed it extremely well. Obviously, I think over the course of last year, Bitcoin was up 150% to where we are today. And if you go moment to moment, your company stock is up 3,400%. I did the maths last night because we’re doing a chat on stage tomorrow at the summit. I guess this leads to the other question about other people trying to replicate the strategy. I remember I was in Nashville last year and I saw you sailor and similar scientific on stage together. And before one of you said it, I was thinking to myself, next year, how many companies are going to be on that stage? And I think today the number is 70 that are implementing some level of Bitcoin strategy. So, you know, at times it’s moved faster than we could expect. But, you know, I mean, did you have any expectation that you’d be running a $2 billion company by one year out? No,
Simon Gerovich [00:07:46]: sometimes I’m pinching myself. It doesn’t seem real. But when you kind of think back to first principles about what it is that we’re doing, I think that this is just the beginning. I can’t feel more optimistic about this category of company than any other category of company out there. And so our role now is really to, I think, spread the story, tell more people about the opportunity, more ways to be able to invest in Bitcoin. And I think in Japan in particular, Bitcoin has been something that’s been available for people to purchase for as long back as Mt. Gox. But because of that experience and perhaps because of the regulation that came out of the aftermath of Mt. Gox, it’s just been, I think, quite difficult for people to get their head around. The account opening documents for opening up a crypto exchange account is incredible. They send you physical mail to your address to confirm that you actually live there. And so the process takes some time. But it’s also the tax thing. It’s very expensive. Capital gains tax is very expensive on purchasing Bitcoin. When you ultimately sell your Bitcoin, it’s taxed as ordinary income at 55%. And that’s the highest of any country in the world. And so in comes MetaPlanet. We’re able to offer Japanese investors a way to get exposure to Bitcoin, leverage exposure to Bitcoin in a very tax-efficient manner. So they’re able to purchase Bitcoin exposure by buying our stock through their retirement accounts. And that’s only taxed at 0%.
Richard Byworth [00:09:23]: No, and that was something I hadn’t completely understood. I didn’t realize how bad the taxation of Bitcoin for the individual was in Japan, which means there’s even more of a need for a company like yours to be on the Japanese stock market and for them to have a way to put this into their retirement account, which is zero capital gains, as you said.
Simon Gerovich [00:09:44]: To be fair, we didn’t actually realize that at the time that we made the pivot. It’s something that we discovered. People go onto Twitter and other forms of social media. They post a screenshot of their purchase and their retirement account. They were the ones that explained to us that actually this has been really great and tax-efficient for them. No, it’s, you know, the Japanese government has now been trying to convince people to move more of their savings into investment. And so this product, this retirement fund is something relatively new. Yeah, I think it was rolled
Richard Byworth [00:10:18]: out when I was just still in Asia. It was 2016 under Urbanomics, the previous prime minister. There are a few things to think about with a Bitcoin treasury company. For a lot of people watching this show, this is not necessarily a Bitcoin podcast. This is about allocation of capital. So just to try and understand how to think to value a Bitcoin company. One of the most important metrics we talk about is MNAV. Do you want to just explain for the audience what that is and how we calculate it and maybe some examples of different companies?
Simon Gerovich [00:10:53]: Sure. So roughly, and again, this is relatively new because traditional finance values companies in general and they don’t have the tools yet to value Bitcoin treasury companies. But the one that is often used is MNAV, which roughly is the multiple of your market cap over your value of your Bitcoin holdings. There are some questions around whether you just use market cap sort of as the equity value or whether you should also add back So you get more of an enterprise value. I think you should look at it from an enterprise value perspective. So you kind of take into consideration how much leverage a company has. And so for instance, our MNAV, our market cap over our Bitcoin holdings is roughly the same as our enterprise value over our Bitcoin holdings because our debt is relatively low. But there are companies out there that have a lot of debt. And so I think their MNAVs aren’t being reflected correctly if they don’t add back the debt. to sort of show what that multiple would otherwise look like. The higher the multiple, higher MNAV that you have, the easier it is for you to be able to raise capital with limited dilution. And so if you think of a company with, say, three times MNAV, they’re able to dilute at that valuation and then put all that capital into buying Bitcoin. That is incredibly accretive versus, say, a company that has one times MNAV. The problem with a company like that is all the dilution You know results in the Bitcoin purchase, but that that doesn’t you have no extra change the Bitcoin per share Correctly correct. The Bitcoin per share remains the same. So you I think want to select companies that have higher m nav because that means that they’re able to dilute faster by Bitcoin at a faster pace than they otherwise could if their m nav was lower But there are other kind of important metrics and the three kind of KPIs which we’ve adopted as a company. And again, these are KPIs which Michael Saylor has come up with and he’s invited everyone around the world to use those metrics. And so we were one of the first to adopt it. The first is BTC yield. BTC yield is effectively the change in Bitcoin per share on a period over period basis. That’s important because the way that Bitcoin treasury companies acquire more Bitcoin is through dilution. But you have to consider if that dilution is accretive or not. And if it is accretive and you can increase Bitcoin per share, then it’s good dilution. We are wired in traditional finance to think that dilution is bad. If a company is selling 20% new shares, all of a sudden you think the share price should fall 20% to account for that dilution. That isn’t the case in Bitcoin treasury land. Shareholders and investors, they welcome dilution. They ask for it, especially if it’s being used to increase Bitcoin per share. So for us, that is the fundamental metric that we go by. We look at every possible capital raising opportunity and we compare it in Bitcoin yield terms, BTC yield terms, and the ones that result in the greatest amount of Bitcoin per share growth are the ones that we look at. If there is something that reduces your Bitcoin per share, then we would not touch it. I remember
Richard Byworth [00:14:02]: when you and I met briefly in Nashville last year, and we were just talking about your multiple at the time, because it was a multiple of 12 times MNAF. I remember both of us were kind of looking at going, you know, that’s a bit lofty. But actually, that was the reason that you were so powerful and so fast in acquiring more Bitcoin, because to your point, the higher the multiple, the more power you have, the more torque you have, so to speak, within that engine of a creative dilution. Very interesting. And I think, you know, obviously, that was a lesson you learned along the way. And I think Saylor admits he’s learning many lessons along the way as he’s building his company and he learned about convertible bonds and the way that, you know, they can be super creative as well. Is there anything now you’re in that you would have changed about your strategy from day one that you’ve you’ve done to date?
Simon Gerovich [00:14:56]: I don’t think so, actually. I think we’ve executed pretty well. We had the struggle in Japan, which, again, it’s very quirky in many ways when it comes to the financial markets. I think the US is a lot more flexible. But the issue in Japan is there’s a limit to how much dilution you can have. in a particular time period. And it’s based on how many issued shares there are at standing. You can authorize up to four times the number of issued shares. And so if we are a small $15 million company, as we were at the beginning of last year, the most we can dilute by is four times that. And so to get from that to a billion dollars takes a lot of work, a lot of effort. So we had planned out steadily how we were going to increase our number of shares over time. We’re now at a level now where it isn’t an issue anymore. We’re able to issue a lot of shares because our paid up shares are now a lot higher. But you know, I think we were very thoughtful about when to sell shares. We didn’t want to sell shares too aggressively. So last year when we had, I guess we were in Nashville, we were 12 times MNAV, we could have taken the position of let’s just sell as many shares we possibly can, let’s sell it down to three times. But the result of that would have been that shareholders, investors that bought our shares would have lost money.
Simon Gerovich [00:16:15]: you don’t want your shareholders to lose money, not that we can control our stock price. Our goal obviously is to create as much value as we can for our shareholders over time, but there’s a right balance. And so I think for us, we’re very much focused on ensuring that investors that join the story at a later time are not disadvantaged and that we’re constantly thinking about how to increase our Bitcoin per share. you know last was the last november we put this very interesting um i shared this in orlando but it was basically our m nav and how that changed since day one and so as you said it was as high as 20 times just before nashville it fell to its lowest point in november last year which was three times and so one could have argued This company is too expensive. How are they selling dollar bills for $3? How can they be three times, how can they be worth three times more than their Bitcoin holdings? Now, if you had sold our shares back then, you would find that today our stock price is twice as high and we have five times as much Bitcoin per share. And so now we’re again back to three times, but it’s an interesting cycle. It isn’t just necessarily share price that moves. It’s the amount of Bitcoin that you own. We announced a big buy this morning and now MNav has declined as a result of it.
Richard Byworth [00:17:32]: No, and I think that’s a very interesting point because actually, if I’d gone out and bought the stock at 20 times MNAV or whatever it was that was your peak, I’d still be absolutely fine because most of the MNAV compression is coming from the dilution, which is essentially making the company more valuable. So you should always attribute a slightly higher MNAV or it should adjust with your purchases. I think it’s going to be very interesting. The market is working this out. Like, you know, we obviously talk about this, I talk about this with a number of other people to just try and think about What is the right way to think about it? And actually Adam Back has come up with this very interesting metric months to mNav cover. Do you want to maybe just explain that one as well?
Simon Gerovich [00:18:19]: Sure. I mean, it’s a relatively, I guess, new concept. I’m just getting my head around it. When I saw Adam Back post about it, I thought, this is incredibly interesting because we’re all trying to find the right tools to value our companies and to help investors and analysts understand how to value companies like ours. And so the challenge is, how do you connect the MNAV, the multiple to your Bitcoin holdings, to something like BTC yields, something that shows you how fast you’re growing? In the traditional world, the faster you grow, the higher the PE you should command. And so the same concept suggests it should apply also for Bitcoin treasury companies. And so this concept that Adam Back has come up with effectively is connecting your multiple, your MNAV, with how quickly you’re growing your Bitcoin per share. And so the way that it works is you take the MNAV, you divide it by the BTC yield. That’s the function of how fast you’re growing. And then you annualize that figure. So at the time that he announced this, and I think he was referring maybe to us when he did it or to other companies. Yeah, I think you were
Richard Byworth [00:19:22]: the company that came out as the best performing under months to mNav cover by that table. Right.
Simon Gerovich [00:19:29]: And so when was it last week, our mNav was I think 3.3 times. We had doubled our BTC per share over the past quarter. And so I think it was like 3.3 divided by 2, which was the BTC yield, and then annualized that. So it gave about a five-month room to cover, I think is the term. So effectively, in five months, we can earn back the premium that the market has assigned to us. Now, since we announced our buy this morning, the numbers have changed, right? Our MNAV is now a little bit lower because we have a lot more Bitcoin and our growth is much higher. Yeah. And so now our months to cover is something like two and a half months. And so if you pay three times multiple for a company like ours, It’s justified because we can make it all back in two months. In fact, that implies if you have a basket of Bitcoin treasury companies, how do you decide which ones to buy more of and which ones maybe to sell out of to rotate into others? I think this new metric that Adam back has come up with will be very useful for that purpose.
Richard Byworth [00:20:35]: Yeah, I’d always been sort of fixated with aggression because I’d seen how you guys had acted. And in fact, you’d moved more aggressively than Saylor had done before he announced his 21-21. So you were actually, you sort of grasped this aggression idea and maybe he saw how fast you were moving and said to himself, well, maybe we need to move even faster because that’s the key. But I think this metric actually So obviously represents that it represents the aggression. So I’m always getting asked, you know, will you buy this 21 capital? I was like, well, I don’t know how aggressive they’re going to be. So it’s impossible to value. I think they’re four or five times MNAV currently with what they’re estimated to be starting with. But you can’t, you can’t quantify their aggression until you actually see them get into the marketplace. Exactly.
Simon Gerovich [00:21:24]: You do definitely need multiple levers there. So MNAV is one thing, but you don’t know that MNAV is justified until you see how quickly and aggressive a company is at accumulating Bitcoin. Of course, in that speed of accumulation also encapsulates the way they raise capital. Lots of different components will drive what whether the valuation is fair or not.
Richard Byworth [00:21:46]: I remember I obviously was working on the convertible bond desk in Japan for Nomura. And so I’m always looking at you guys thinking, when will they issue a convertible bond? Because there are a segment of investors that only invest in Japanese convertible bonds. Or there might be even a global CB book in a hedge fund that has to have a 10% allocation to Japan. and there’s just no paper coming out. And even if paper is coming out, it’s not particularly interesting paper. I’m fairly convinced if you were to issue a convertible bond, it would be snapped up. So, you know, where are you thinking in terms of, you know, two billion market cap credit profile of a company like yours versus a year ago is a very different thing. And I think perhaps credit as a metric is on the table for some of these investment banks. What are you thinking in terms of products down the road as other potential tools to be increasing your Bitcoin?
Simon Gerovich [00:22:45]: We’re incredibly humbled by the level of interest that has been in MetaPlanet recently. Every investment bank that you can name has contacted us and wants to offer us various structures. And so we’ve seen the whole gambit. And I think You know, CBs is one which people are used to issuing for companies like Strategy, and we’ve been proposed, you know, quite a few different structures. You know, I’m still trying to formulate in my mind whether it’s the best thing for the company or not. You know, we have a lot of, we have incredible volatility. We’re 100%, 140% 90-day vol, which would make us one of the highest vol stocks in the world. And that’s definitely, you know, a CBR player would love to buy a CB with that kind of profile.
Simon Gerovich [00:23:31]: also thinking though about permanent capital, and I think as much as possible if we can have permanent capital and not worry about potential future drawdowns from Bitcoin price, just have long-term staying power regardless, that is probably something which investors will value and find attractive. We’re still in phase one of our growth. If you think of strategies growth as being equity in the beginning and then some CBs and now they’re going into their preferred share issuances, we’re still kind of in the beginning and we want to really bolster up our balance sheet, accumulate as much Bitcoin as we can before we begin to laden our company with debt. Now, I think we will eventually move to the realm of CBs, but I would very much prefer to have investors who are long only, who don’t short 70% of your stock out of the gate, call it faux investors that may not actually be putting much capital to work and they’re really just trading the volatility. Now, there is a place that those investors can play in the world. Michael Shaji has raised a lot of capital through those investors enabling him to purchase a lot of Bitcoin. But I think we have the benefit now of seeing the hard work that Michael Saylor has gone through and maybe looking at his earnings presentations and seeing where he feels most value can come. And I think what I’m most excited about personally is the preferred share route. And I think in Japan, where Japan is completely yield starved, we should be able to offer a similar structure at a much lower yield. And that for me is incredibly exciting.
Richard Byworth [00:25:08]: Yeah, the way I think about it for someone like you is if you do see the mNav start to drift, then converts become more interesting because to your point with 150 volatility, your strike price for the convert is going to give you just such a huge implicit accretive dilution. Obviously, it’s not immediate dilution, but you have the possibility that that converts and you can put structures in it that force conversion almost immediately so that you’re making sure that you’re not sitting there with debt the minute that you have the opportunity to remove that debt through conversion, then you can do so.
Simon Gerovich [00:25:47]: I mean, we’d love to find more investors like Allianz that invest in strategies. I think there’s CB maybe a few issuances ago, and they were very happy forgoing the coupon in exchange for Bitcoin upside. And I think that’s an incredible innovation, Michael noticed that there were pools of capital around the world that would love to have exposure to Bitcoin, and they weren’t able to do so up until now. And we’d like to leverage that and look for pockets of capital as well that want exposure to Bitcoin. And maybe there are more Japanese institutions who are used to not earning very much on their investments to buy something like this and take a sort of a long only view.
Richard Byworth [00:26:30]: Yeah. I mean, the other thing you can do as well is, if you think about it, is you can actually price the convert to an outright buyer, which won’t be interesting for a hedge fund. Yes. You can put bells and whistles in there that will put off the hedge fund. And you can also, I mean, we used to have this with issuers out of Japan all the time where they go, okay, I want to see the investor list. Yes. I don’t want that investor buying my convertible bond. And so you’d have to kick this investor out. I’m sorry. the corporate has said you’re not in. So you can maybe think about that from an outright investor perspective. There are, or at least certainly when I left the convertible bond market, there was a lot of capital kicking around in outright convertible bond funds.
Simon Gerovich [00:27:12]: I guess we’re not going to name and shame the types of undesirable CB investors on this podcast. No, we certainly
Richard Byworth [00:27:19]: will not. You’ve talked about obviously, Sailor being a fantastic leader for the industry and helping people understand how to position a company to to win in the same way that he has done. I imagine now with your success, you’re getting a number of people coming to you to try and ask about it. I mean, I even get calls from people. I’m nobody, but you are running one of the most successful Bitcoin treasury companies. How often are you getting a call about someone trying to implement the same strategy and looking for your guidance?
Simon Gerovich [00:27:58]: Lately it’s been quite often and it’s again very humbling that people would want to hear from us. It’s still only been 12 months into our journey and we’re very happy to share our best practices. I would say that You know, it’s important to figure out who actually believes in the story, believes in Bitcoin, versus those who are looking at this purely opportunistically. And so many people that have reached out, you know, before I take a call, I do do a bit of homework on their company. And more often than not, it is a zombie company. Their stock price has not done very well. But there’s no indication there that they really are wanting to buy Bitcoin for legitimate reasons. They see it as a way to just pump their stock up, which I think is not a good motivation. I think investors are really smart, and they see right through that. There are many others out there. And I would say Eric Semmler has now become a dear friend. And he and I were both on stage in Nashville together. And yeah, he truly believes in Bitcoin. Yeah, so I think it’s very important to kind of know what that motivation is. But I think this is just the beginning. There’ll be so many more public companies around the world that will begin to adopt this. One of our shareholders, UTXO management, David Bailey, I’m not sure when this airs. I think by the time this airs, he will be announcing his deal. And he’s also Nakamoto Nakamoto. He’s doing the same. Is it in Japan? It’ll be in the US. I believe okay And so that’s that’s incredibly exciting because their modus operandi has been to support Bitcoin Treasury companies in every market. He wants to have a a strategy of every nation and support them in the way that he supported us at that time. So I think a year from now, there’ll be a thousand public companies that have Bitcoin on the balance sheet.
Richard Byworth [00:29:55]: Yeah.
Simon Gerovich [00:29:55]: He sits on your advisory board? One of his co-founders, Tyler Evans, sits on our board. David just joined our strategic board of advisors.
Richard Byworth [00:30:05]: And you have Eric Trump as well. That’s right. Fantastic. So you’re obviously getting a lot of focus from the
Simon Gerovich [00:30:13]: US for your efforts in Japan as well. I think there’s a lot of excitement about Japan as a market, Asia as a continent. I think really should be a Bitcoin superpower.
Richard Byworth [00:30:23]: Yeah,
Simon Gerovich [00:30:23]: I agree. So we really want to do everything we can to help make that happen. You spent a lot of your career in Japan as well. It’s an amazing place. And what we’ve certainly realized now is that there are millions of Japanese that love Bitcoin, that want to learn more about Bitcoin. And so apart from buying Bitcoin for our balance sheet, it’s also about educating as many people in Japan as possible, teaching them about financial literacy, teaching them about Bitcoin. So we have a big goal ahead of us, really, to onboard the next million people into Bitcoin in Japan.
Richard Byworth [00:30:56]: Yeah. I mean, how do you think about the competition element? Obviously, you’re talking about potentially helping other companies to implement a Bitcoin strategy. Obviously, Sailor’s done so. At a certain point, it’s beneficial to you because they’re out there buying more Bitcoin, which obviously helps improve your treasury. To a certain degree, it may decrease your MNAV premium as well as people are given other options to build a portfolio. How do you think about that?
Simon Gerovich [00:31:23]: I think Bitcoin is different to the traditional world, which is a doggy dog world. It’s all about competition. There’s something special about Bitcoin where everyone wants to elevate each other. You share your best practices. You want people all to do well. Yeah. Sailor’s been the perfect person for that. He’s been so generous with his time. Spends so much of his effort, really enabling others to kind of follow that same playbook. So we want to do the same. I’d like to personally do the same. And so a lot of our time now is dedicated to that. There will be more competition. And so what worries me often is, you know, I wake up in the morning and I say, oh my God, I don’t have enough Bitcoin. And so all we want to do is just accumulate more and more of it. We want to get to escape velocity, certainly in Asia, so that no one can catch up. At the same time, we want to empower others to discover Bitcoin, I think before it becomes less affordable. And now is the time for us to be doing that.
Richard Byworth [00:32:25]: Let’s maybe just touch on that because the other day when we started running from 95,000, I was going to put out a tweet. I was like, it just feels like we’ve got to the point where all supply below 100,000 is taken. and there’s just no one willing left to sell below 100,000. Maybe talk a little bit, you talked about the urgency of getting more Bitcoin before, but also helping people understand it before it becomes out of reach for so many people. Where do you think we are in terms of the inelastic supply of Bitcoin and what that’s gonna do in a pricing run to where we might go to this year? I
Simon Gerovich [00:33:06]: don’t like to talk about price targets, but because you’re often found that you’re off, but I’m incredibly bullish on Bitcoin. I think fair value is much, much higher than where we are now. So directionally, there’s only one way it’s going. and the for those of us who are kind of familiar with finance and You know the simplicity of supply and demand It feels very obvious that there’s there’s so much demand and obviously there’s limited supply here now We’re buying Bitcoin strategies buying Bitcoin every Bitcoin Treasury companies buying Bitcoin They’re sovereigns buying Bitcoin and then as individuals learning about you know our stories that are enabling us to buy Bitcoin by buying our shares and there’s only 21 million of these things. And so it’s incredibly obvious to me and most people kind of in the Bitcoin community that Bitcoin is only going in one direction.
Richard Byworth [00:34:01]: We’ve covered most things. The one thing I did want to ask you about was the institutional investors that you now have. So you’ve got, in common with strategy, you’ve got Capital Group and Norges Bank, who are very big allocators of capital. I guess there’s only so much you can say, but I would love to know how they think about valuing your company. Whereas, you know, are they looking out there and saying, oh, actually, Marathon’s really cheap at a one times MNAV. Have they got the joke with the multiple actually being a cheaper thing because it’s more beneficial for a company that moves as aggressively as you do?
Simon Gerovich [00:34:39]: Yeah, I haven’t had a chance to speak to Norges Bank, but I do have a nice dialogue with many of the folks at Capital. And I think for them, they’re looking at investing in new and interesting categories. They certainly see Bitcoin treasury companies as an important place to be invested. They’ve got so much cash out there to deploy. And I think what’s brilliant about a Bitcoin treasury company model, not just for us, but for asset allocators, is that they’re able to allocate more and more capital as we dilute. They invite us to dilute quickly. And I do remember that some of our investors at the beginning of this year, so there was a lull between kind of middle of December and beginning of February,
Simon Gerovich [00:35:23]: but we were waiting to get regulatory approval to issue more shares, but we weren’t selling any shares. And I think people are getting antsy saying what’s going on. Please dilute us faster so you can buy more Bitcoin. I don’t think those investors are really looking at MNAV per se. I think they’re looking at how quickly these companies are able to grow their Bitcoin per share. And indirectly, those that are growing their Bitcoin per share rapidly can justify the premiums, whatever they may be. We’ve seen so many new institutional investors begin to buy our shares. We see their names appear on our shareholder register, making various filings. So I think we’re uniquely positioned in Asia as being able to give asset allocators, I guess in Asia exposure to the Bitcoin treasury strategy that, you know, perhaps they weren’t able to access because strategy was a US stock and they’re, you know, they’re required to invest in Asia.
Richard Byworth [00:36:22]: Yeah. I often, I mean, people will often ask me micro strategy or meta planet. And for me, I think the, one of the very interesting things is the uniqueness of meta planet being the only Bitcoin proxy in the second largest stock market in the world. I’m still surprised that we haven’t had an imitator come along. But the other thing, of course, that will draw capital, because I imagine they can go into the NYSER accounts, is an ETF in Japan. Do you see that on the horizon at any point? Do you think that’s a possibility?
Simon Gerovich [00:36:53]: I think it’s definitely a possibility. I know that there A lot of parties now on the ground that are actively trying to get a Bitcoin ETF to go live. I think there’s still some time before that happens. I think it’s probably at least a few years out. But when the ETF launched in the US, that was the beginning of last year, that was the best performing year that strategy has seen. And so I don’t see it as a bad thing. I see it as a really good thing because it on boards more people into the world of Bitcoin. And then once they get exposure to Bitcoin through an ETF, they realize, well, I’d like something a little bit more, you know, higher octane. I want to be able to have my investment grow its Bitcoin per share more than I can if I just own Bitcoin directly or an ETF. Same thing from a tax perspective. People say you have this moat now because of the tax differential. Again, I would like to see the tax rate fall because that would bring more people into Bitcoin. People that might say right now, I’m not going to buy this because of the high tax rates. Yeah, once they enter the market, then they become kind of our customers.
Richard Byworth [00:37:56]: I don’t remember the Nisa accounts. So the tax exempt accounts, is there a certain limitation that you can put in every year? Yes,
Simon Gerovich [00:38:03]: there is. I don’t know the exact number. I think it’s something like two and a half million yen a year. So that’s what 15 $16,000 a year. Yeah, okay.
Richard Byworth [00:38:11]: So obviously, if the tax situation did change, then suddenly, you could have a lot more coming in for retail. That’s
Simon Gerovich [00:38:19]: right. The NISA is always 0% versus if they lower the tax, they wouldn’t lower it by less than 20%.
Richard Byworth [00:38:25]: Okay. So you’d go from an income assessment to a 35%? Or 20%, whatever it may be. Okay. Got you. Got you. All right. My final question always is, and I think I know the answer to this, but I’m going to ask you anyway, is how are you allocating your own capital? I think I’d start by saying
Simon Gerovich [00:38:44]: that up until now, I’ve liked to spread my eggs far and wide. I like to invest in lots of different things. And at the end of the day, most things have not performed particularly well. And so now I like to have everything in kind of one egg in my basket, only one egg to watch. And that really is Bitcoin. I actually own more MetaPlanet shares than I do Bitcoin because I think that we’re going to outperform Bitcoin over time. That’s sort of how we’re designed. I think I shared this on Natalie’s podcast, but I at that time had just sold my apartment in Tokyo because I wanted to allocate more to Bitcoin. And so all I want to do now is just own Bitcoin. I see no better store value over the long term than Bitcoin. And I think anyone who doesn’t own Bitcoin yet absolutely needs to wake up, do some research, and allocate some money to Bitcoin. Although if you only allocate some to Bitcoin, most of it is not in Bitcoin, which kind of defeats the purpose. But yes, my financial advice is all your money in Bitcoin.
Richard Byworth [00:39:50]: Wow, what a way to finish. Thank you, Simon. That was a wonderful exploration of the Metaplanet story. I really appreciate you coming here. Thank you very much for having me. It was a pleasure. Thanks.