Discover how a small UK company adopted a Bitcoin treasury strategy, turning millions into over a billion, and why this model may be the future of investing.
Timestamp Overview
[00:00:00 - 07:20] From Small Business to Billion-Pound Bitcoin Company
- Andrew Webley explains how his small web design company went public in the UK.
- The company adopted a “Bitcoin Treasury Strategy,” holding Bitcoin as its main asset.
- Its value grew from a few million to over a billion pounds in just a few months.
- The company holds its extra cash in Bitcoin, believing it’s the best asset in the world for future growth.
[07:20 - 10:42] Why Is a Small Company Worth So Much?
- The company’s value isn’t based on its profits, but on its growing pile of Bitcoin.
- Investors are willing to pay a premium for the shares, similar to what happened with a Japanese company called Metaplanet.
- This premium exists because the company can raise money and buy Bitcoin more effectively than an individual can.
- There are limited ways for people in the UK to invest retirement funds in Bitcoin, making companies like this very attractive.
[10:42 - 15:59] A New Way to Create Value
- Traditional companies are valued on profits (P/E ratio), which can take decades to earn back your investment.
- Bitcoin treasury companies are valued on how quickly they can add more Bitcoin to their balance sheet.
- This new method creates value much faster, sometimes in months instead of years.
- Smaller companies can grow their Bitcoin holdings much faster than giant ones like MicroStrategy, making them potentially more explosive investments.
[15:59 - 23:14] The Lifecycle of a Bitcoin Treasury Company
- As these companies grow, they attract bigger and more stable investors, like large investment funds.
- Currently, there are very few publicly traded companies aggressively buying Bitcoin, so the opportunity is still new.
- The goal is to create different investment products in the future, like special shares that pay a fixed income (a dividend).
- This strategy allows them to learn from successful companies like MicroStrategy in the US and Metaplanet in Japan.
[23:14 - 29:20] The “Backdoor” for Bitcoin Investing
- In countries like the UK and Japan, rules make it hard for people to buy Bitcoin through traditional investment accounts (like a 401k or an ETF).
- These treasury companies provide a legal and accessible “backdoor” for people to get exposure to Bitcoin.
- There is a massive amount of money (trillions of dollars) in low-return investments like bonds.
- These companies can attract that money by offering better returns, using the capital to buy more Bitcoin.
[29:20 - 38:05] How They Did It and The Risks Involved
- Smarter Web went public using a “reverse takeover,” which is a faster, more efficient way to get listed on the stock market.
- Jesse Myers describes these companies as a “release valve,” allowing money to flow from overvalued traditional stocks into Bitcoin.
- A new metric called “Days to Cover” is introduced, measuring how quickly a company can grow into its valuation—it’s like a P/E ratio, but for days instead of years.
- Important: Bitcoin is extremely volatile. While the potential rewards are high, so are the risks, and its price can drop suddenly.
[38:05 - 49:40] The Genius of Preferred Stock
- Companies can raise money by issuing “preferred stock,” which pays a fixed income (like a dividend) to investors.
- If Bitcoin’s value continues to rise dramatically, the fixed dollar amount of that dividend becomes a tiny fraction of the company’s total value over time.
- This allows the company to borrow money very cheaply in the long run while providing a stable, high-yield income stream for investors who want less risk.
- This is a key strategy used by MicroStrategy to fuel its Bitcoin purchases.
[49:40 - 55:18] The Future: A Winner-Take-Most World
- Jesse Myers believes the only thing better than owning Bitcoin is owning a company designed to get more Bitcoin.
- He predicts that in each country, one dominant Bitcoin treasury company will emerge as the “winner that takes most” of the investment capital.
- Smarter Web has a huge head start in the UK, similar to Metaplanet in Japan and MicroStrategy in the US.
- The race to become the dominant player in other countries is happening right now.
Notable Quotes
The Next Financial Giants
These companies are going to be almost like the banks of the future. And I mean that in a capital slash balance sheet perspective.
Andrew Webley @asjwebley
A Generational Opportunity
This reminds me of those sorts of times a hundred years ago when there was something so significant happening in the world that was not just the chance of a lifetime, but the chance of a hundred years.
Andrew Webley @asjwebley
New Valuation
You can go buy Apple for 35 PE or you can buy a Bitcoin treasury company that's delivering, growing into its value in maybe less than a year.
Jesse Myers @croesus_btc
Embracing Volatility
Volatility is vitality. When it comes to this strategy in particular...you want volatility because that volatility skews to the upside.
Jesse Myers @croesus_btc
Winner Take Most
I think what's happening here is that there will be a winner take most in each capital market. We've seen that in the US, that's Strategy. We've seen it in Japan, that's Metaplanet.
Jesse Myers @croesus_btc
Asset Performance
The only thing better than bitcoin is more bitcoin, as Saylor likes to say. And Bitcoin treasury companies are designed to achieve that.
Jesse Myers @croesus_btc
Transcript
Andrew Webley [00:00:00]: These companies are going to be almost like the banks of the future. And I mean that in a capital slash balance sheet perspective, because ultimately what you’ve got with us is you’ve got a business that’s been publicly listed for two and a half months, that has got zero debt, that’s got a very low cost base, that’s got £150 million of effectively cash and bitcoin. And it doesn’t take much to see how, how that’s going to turn into billions.
Preston Pysh [00:00:34]: Andrew, let’s start off here just so people can kind of understand the setup. You have a company, it’s not a publicly traded company. You’re over in the UK and you have a private company, you’re a bitcoiner. Obviously, you decide to become a publicly traded company through which, which we’ll talk about the method that you, that you went public, but your company wasn’t real big. I mean, you’re talking a company that’s dealing in millions in revenue and net income from my, my understanding. And, you know, so, like, for people that are just trying to understand the basics of like, market cap, like, what’s a company like that worth? Well, it might be worth tens of millions. Right. But right now, and correct me if I’m wrong, the market’s valuing your company at, Is it close to a billion dollars? Is that right?
Andrew Webley [00:01:24]: It’s actually more than that. It’s a billion pounds.
Preston Pysh [00:01:27]: Billion pounds? Yeah.
Andrew Webley [00:01:28]: About 1.3, $1.4 billion.
Preston Pysh [00:01:31]: Yeah.
Andrew Webley [00:01:32]: Yeah. It’s been quite the ride the last couple of months.
Preston Pysh [00:01:35]: So anybody who understands valuations, they’re looking at this and they’re saying, what, what did you guys just say? Like, how is that even possible? Let’s walk the dog on this. And, you know, I think for people that were around in the 90s and saw the Internet boom and all this kind of stuff, they’re looking at what’s happening with bitcoin treasury companies and they’re like, on Ed, they’re saying, like, this is a flashback of, you know, the late 1990s. But let’s talk about the company. Let’s talk about what it is, what it isn’t. This idea of taking a bitcoin treasury strategy. And then I want to get into Jesse just talking about it at large, not necessarily the smarter web company, but you have these awesome charts that you’ve put up online and I’ve got a copy of these slides. I’m going to put them up later on in the show for you to go through because they’re really awesome. But Andrew, take it away with the company, the founding of the company, what the operational business is and then we’ll go from there.
Andrew Webley [00:02:31]: Yeah, so it’s quite good actually that you mentioned the dot com period and then the dot com crash because I actually started my career in 1999. So I joined a small company that became one of the biggest companies in the UK over. Well, I worked there for 10 years and the company’s today still of the biggest companies in the uk, a company called Hargreaves Lansdowne, which is the largest retail investment broker. So I did that for 10 years. 1999 for 10 years. And then I always wanted to set up my own business. So I left hl. I often describe it as a very well paid apprenticeship.
Andrew Webley [00:03:07]: You know, we listed it on the stock market but you know, I, I got bored and I missed the early days of HL where it was very entrepreneurial. So I’m a programmer, you know, I’ve done a little bit of programming today, Funnily enough, I don’t get to do it so much anymore. But I wanted to build a system, a content management system that we could use to design and build websites for people. This is 15 years ago that I started this. So I built a system that I believe is, you know, one of the best types of systems of its kind in the world. And I built a business around it. You know, we design websites for people, people can update their websites, we help them with marketing. So very sort of high margin offering, but it’s also high quality with exceptional customer service.
Andrew Webley [00:03:51]: But it is, as you say, it’s a very, very, very small business, or it was a very, very small business. It’s pretty big business actually. One of the biggest, 250 in the UK by market cap. So I had this business and then about, I don’t know, eight years ago, let’s say I found Bitcoin and I bought a bit, sold a bit, bought a bit, sold a bit. I thought it was interesting. But then about five years ago I came across a company called Strategy, which was then called MicroStrategy, which everyone knows, of course. And for me that was the moment when I thought, this is fantastic. So I’ve been investing for 25 years.
Andrew Webley [00:04:29]: I understand public markets. I’ve had some good investments and bad investments. I’ve worked in the sector and so I get investing. And then I also understood bitcoin. But when the two came together for me, I just thought that this was the best thing in the world from an investing point of view. And the reason why it’s so good for me is in the uk, a lot of people, they’ve got money in certain types of products, as opposed to loads of cash in their bank accounts. And these products, which we call ISAs and SEPs, one’s a saving account, one’s a retirement account. Often people have got a lot of capital and they’ve got to be fair, relatively limited options of what they can do with that capital.
Andrew Webley [00:05:09]: So when strategy, you know, at the time called MicroStrategy, came around, I just thought it was so incredible. And from an investor’s point of view, you know, investing in that, and then in more recent years, other similar companies, you know, it sort of bought investing back into, you know, sort of, well, not just fun, but profitability again. So then about two years ago, I was thinking, well, you know, why haven’t we got anything like this in the uk? I love strategy and I’m very lucky that, you know, now Michael Sada speaks to me. He spent time with me. He is very complimentary about what we’re doing and I’m very grateful for that. But, you know, I want something that’s doing that, that’s a UK business. You know, we all like things where we live, some of the things we don’t like where we live, but on the whole, we like where we live, or I certainly do anyway. And I wanted a UK company to do it, but I kept looking and I couldn’t find.
Jesse Myers [00:06:00]: Right.
Andrew Webley [00:06:01]: So then last year, in 2024, I thought, well, if no one else is going to do it, as I think it should be done, I will list my business on the stock market and I will tweak the strategy, which by tweak, I’ve been doing the same strategy on a much smaller scale and, you know, we’ll see where it goes. So earlier this year, and it’s important for everyone to be realistic that the operating business, the Smarter Web company, is a small but profitable operating business. So earlier this year, we listed it on the stock market after approximately four months of quite hard work. And since then, we’ve grown the business by increasing the balance sheet, by raising additional capital at beneficial terms to the existing shareholders. We’ve got a lot of spare capital, which means that we store the capital in the very best asset in the world, which is Bitcoin, and we hold that capital for the future benefit of the business and therefore its shareholders. It’s gone really well. We’re actually, I believe we’re, if not the best, one of the best global equities this year we’re the best IPO in UK history. We’re the fastest stock to ever do 100x and we’ve got, you know, ballpark, £150 million in our treasury, Bitcoin and a bit of cash, you know, approximate numbers.
Andrew Webley [00:07:20]: So yeah, it’s gone pretty well. And, and we’re very much looking forward to the future.
Jesse Myers [00:07:24]: As Andrew likes to say. It’s. We’re doing okay when really it has been, I think the biggest sensation in, in modern British business history. And yeah, Andrew’s quite right. I there’s no better performing public company in the world in 2025, which is very interesting because Meta Planet was the best performing public equity in the world in 2024.
Preston Pysh [00:07:46]: Yeah.
Jesse Myers [00:07:47]: And we’re repeating that path. We’re taking a lot of our guidance from the strategy that Meta Planet deployed very effectively. And I think there’s a ton of similarities in the circumstances of the UK and the circumstances of Japan. What Andrew was talking about is for Americans, effectively 401ks in the UK, the equivalent can’t access bitcoin. They’re not allowed to. There’s no ETF still. So you can get access to Bitcoin through a bitcoin treasury company and a homegrown one seems to be particularly appealing and accessible. And I think that’s part of the tailwind that has delivered smarter web from a 4 million pound market cap company three months ago to now a billion pound market cap company.
Jesse Myers [00:08:37]: And that still puts us like a 10x away from where Metaplanet is today.
Preston Pysh [00:08:42]: So guys, for people listening that hear M Nav, you guys are like at what, an m nav of 10 at this point? What’s the M Nav on the company?
Andrew Webley [00:08:50]: No, it’s, it’s a bit lower actually. So today it’s probably, you know, around about six, it probably floats five, seven, maybe eight. You know, it has, it has gone higher at times, of course, but the nav, our job is running the company is to use the M Nav. The higher it gets, the more beneficial additional capital can be to the business and therefore its shareholders. So you know, our high end nav, in some ways you think the company’s getting too expensive, but that’s because the demand exists for the company and that’s an opportunity to then raise additional capital and then to take the business forward through the strength of the balance sheet. So, you know, if anything, as we’re recording this today, I would say that we’re, you know, almost too cheap actually. You know, providing you are someone that understands, you know, what NAV means. Because in traditional investing, you know, we buy companies for either a yield or for a potential.
Andrew Webley [00:09:48]: In companies that adopted Bitcoin on their balance sheet, you buy them for their potential, which is demonstrated by their speed of accumulation. You know, where again, if not the fastest, one of the fastest growing companies in the world to have Bitcoin on their balance sheet, you know, we got from zero to a thousand Bitcoin almost quicker than anyone else. We did it in in half the speed that I set out at the start. That’s a third of the speed of what metaplanet did it in last year. So it’s a strange concept if you’re not familiar with Bitcoin treasury companies, but if you spend a couple of hours understanding it, it’s so similar to why we buy Nvidia or any of these other fantastic companies that trade a multiple of that potential earnings. It’s just that we have different metrics in arm space, so it takes a bit of time for people to understand them.
Jesse Myers [00:10:42]: Yeah, Preston, I’ve been starting to describe it this way and I think about you every time I say this, but, you know, right now Apple trades at a 35 PE ratio, right? So you’re effectively paying for 35 years of profits today. Right? That’s what people do in the equities markets. And everything’s been bid up to crazy PE ratios. A Bitcoin treasury company is delivering value to shareholders through a different way. It’s not delivering income statement profits, it’s delivering a better and better balance sheet by accumulating Bitcoin. And that’s where MNAV comes in. And the multiple of your net asset value, which really means the multiple of your, your Bitcoin plus your cash. And the Bitcoin treasury companies grow into their M NAV as they continue to accumulate Bitcoin in an accretive way, which means delivering additional Bitcoin per share by using capital market tools to raise capital and deploying the Bitcoin.
Jesse Myers [00:11:41]: And it takes some time for you to grow into that MNAV. So if we’re trading at a 6M NAV to and we’re fully deployed into Bitcoin, on the surface it looks like you’re paying for Bitcoin that’s six times more expensive. But really you’re buying into a machine that has a track record of growing its Bitcoin per share over time and will continue to do that by deploying the same playbook going forward. And it will take some amount of time for that Bitcoin per share to grow 6x. But if the company stays on track, it will do that and go beyond. Right. And if you look at the sort of days to cover metric, which means how long it takes you to grow into your M Nav, it varies for different Bitcoin treasury companies at different stages of maturity. For Strategy it’s about 700 days, so two years.
Jesse Myers [00:12:35]: For Meta Planet it’s about half a year. And this is historically looking, but for Smarter web it’s about 35 days right now that will continue to grow as we mature. Just right there that what we’re talking about is effectively a PE ratio in a different sense. It’s a different type of PE ratio, but the same idea of how long does it take you to earn back your value. If you invest in a company today with strategy, they’re effectively at a two not PE ratio but price to Bitcoin accumulation ratio. And for Meta planet it’s a 0.5. For Smarter Web right now it’s a 0.1. So if you look at like where you can invest your capital in equities markets, you can go with value investing approach, whereas a good PE ratio and there’s nothing good out there.
Jesse Myers [00:13:26]: Right? Preston, you talk about this all the time. Everything’s been bid up to crazy valuations. You can go buy Apple for 35 pe or you can buy a Bitcoin treasury company that’s delivering growing into its value in maybe less than a year.
Preston Pysh [00:13:39]: For a person who’s hearing all of this, they’re looking at it and saying there’s no way that this like makes any sense. Right. But if I was going to kind of assist in how you guys are describing this, I think a key important point of why your M Nav is so high is because the amount of Bitcoin that you’re currently holding and I think the number’s like what, 7, 800 Bitcoin, is that right?
Jesse Myers [00:14:03]: The number you were looking at is a week ago. We are now at 1275 as of today.
Preston Pysh [00:14:08]: Okay.
Jesse Myers [00:14:09]: Which means that in the last seven days we’ve accumulated 65% more Bitcoin.
Preston Pysh [00:14:14]: This is what’s important because that number is so relatively small relative to the market cap of the company and their ability to buy it for 1/6 the price of a retail person that’s going out there and buying it. Because The M Nav is 6, they’re able to accumulate Bitcoin at a pace that is so much faster than microstrategy. That has an enormous has 500,000 plus Bitcoin because they have so many bitcoin, it’s actually somewhat of a limitation in their ability to get more compared to one of these small, let’s call it race car like meta planet or you guys smarter web that can. So the real question and what I find really fascinating about all of this as this continues to unfold, there’s this huge incentive for more and more of these treasury companies because the smaller their starting point and their ability to kind of manage the risk appetite of interest expense and dividend expense, I’m calling it an expense, but dividend payments is going to really kind of be a huge part of their success. And I think that it’s going to attract so with time and I don’t know if we’re in an interim bubble here in the short term and then maybe some of this starts coming back three or four years later or what? I don’t know. But I do have a sneaking suspicion that all of this is not going away and that this is only going to get crazier in the decade to come. And it seems like the smaller you are, the more of an advantage you have for common stock performance. Would you guys agree with that?
Andrew Webley [00:15:59]: I would and I wouldn’t. You’re absolutely right in what you say. But what we have to remember here is let’s say there’s 150 public companies that have got bitcoin on the balance sheet. It’s probably a similar number to that compared with the thousands and thousands of public companies that haven’t. And then companies that put bitcoin on their balance sheet, they’re going to be either aggressive companies like US and like MicroStrategy, where they’re trying to really build their balance sheet, or their companies that aren’t doing the same strategy as us, but they’re holding some of their assets in bitcoin as opposed to property, cash, et cetera, et cetera. So we’re still very early. There’s only, you know, when I say a few 150 or whatever. So that’s the first thing to say.
Andrew Webley [00:16:44]: The second thing to say is that it depends on the investor profile. So if you take us as an example, as a company that’s approximately 1 billion pound market cap at the moment, we are only just getting to the size when certain investors would invest in us. And that comes down to the size and the liquidity of the stock. When you are a very, very small company and you’re just getting started with a similar strategy to us, you’ll find that you’ll have a Different investor profile that will be a lot more growth orientated. So as the bitcoin treasury company gets bigger, everything else being equal, the profile of the investor gets, let’s say, less risky. So when you’re a small bitcoin treasury company, you’re appealing to different investors than when you are a big bitcoin treasury company. And obviously strategy being the very best example of that, in the sense that they’ve got certain products that are designed for those different types of investors and different pools of capital. So the job of a company that’s adopting a bitcoin treasury strategy like ourselves is as you grow, you cater for different types of investors.
Andrew Webley [00:17:51]: And when you get very, very big, and this is, you know, a couple of years time for us as opposed to the next year or two, the volatility may decrease ever so slightly, which is actually, dare I say, a good thing for the types of investors that want to invest in you, or you even use other products that you’ve launched, like preference shares, for example, to smooth out some of that volatility so that it’s more comfortable for those types of people. Because there’s not that many people, you know. And when I say people, I mean entities, governments, et cetera, that I’ve got serious exposure to bitcoin, which is what we all believe people that think bitcoin is the solution to everything will happen as a matter of course over a relatively short period of time. So it’s about unlocking the capital, whether it’s the debt markets, the governments, you know, whatever you want, and allowing them to access bitcoin in a way that’s comfortable to them. And I agree with what you said, but the lifecycle needs to be remembered because it’s all about the bigger you get, the larger the pools of capital that come in because they come from different types of places, you know, like bigger and bigger investment groups and so on and so forth. So it’s quite an interesting area. As opposed to when we started, for example, you know, we had a group of my friends and family that, you know, put in the seed capital as an example. And then as we’ve grown, institutional investors have come in and then come in at a bigger size and then another one’s coming and things.
Andrew Webley [00:19:17]: So I think that’s a point that’s worth making.
Preston Pysh [00:19:20]: I can only imagine what your family and friends think about their stock after watching it go.
Andrew Webley [00:19:27]: They’re pretty happy.
Preston Pysh [00:19:28]: They’re pretty happy. I bet you they are pretty happy.
Jesse Myers [00:19:30]: Doing okay.
Preston Pysh [00:19:31]: What is the derivatives market around the ticker and I’m going to say the ticker here and correct me if I’m wrong, it’s swc. AQ is what I’m seeing here on Yahoo Finance.
Andrew Webley [00:19:43]: So investors can access our stock at the moment in three different ways. So if you’ve got access to the UK markets, it’s swc, which is listed on one of the two stock markets that we have in the uk. We’re also available on the OTC market in the us. So if you’re an American investor, you can access it through pswcf. And then if you’re a European investor, there’s a cross listing of our stock in Frankfurt, so you can access it as 3M8. So it actually already, even in this first two and a half months, trades in three different markets, if we call them markets, it will be more accessible.
Preston Pysh [00:20:26]: That’s really interesting in and of itself. Talk to me about the liquidity, talk to me about the derivatives that are being wrapped around the underlying here. What does that look like?
Andrew Webley [00:20:38]: Yeah. So at the moment, because we’re in the early stages, what we’ve done is we’ve raised our capital through traditional equity, you know, common stock. It’s a low risk approach for the business, it aligns everyone perfectly and it’s appropriate for our size. So we haven’t done any sort of crazy funding solutions because we haven’t needed to. And one of the things that’s very important to us is transparency. So at the moment all of the fundraisings that we have done have been private placements with a variety of high net worth retail investors and institutional investors. And then we’ve also been able to, which is very unusual in the uk, very common in the States, we’ve been able to develop something that’s a bit like an ATM style facility, so the company can sell its stock into the market through a third party on every update. So that’s what we’ve done into the future.
Andrew Webley [00:21:28]: The end goal is to do exactly what strategy are doing, which is to have these different types of products, preference shares and to structure them with different value to what the common soccer’s got. So for example, it might be a preference shares that pays out a 10% dividend. It would be called a dividend, not a coupon because it’s an equity. But effectively it’s structured like a bond and then those people can hold that and it will pay that out for life. 10% a year for life. Most people would like that. Now we would then introduce other things. So we might have one that pays out, you know, A different coupon, a different dividend, but then has a convertible option.
Andrew Webley [00:22:09]: So you know, if the stock 2 1/2x is for example, from when the debt was issued, which isn’t really debt, it’s an equity, then you know, we allow them to convert that into common stock. So you can do these, these different funding solutions. And the great thing about what we can do is we can look at the great companies out there in the world and the best two examples of those are strategy in the us, a Meta planet in Japan, and we can use what they’ve learned. And indeed, because we’re all friendly with each other, we can share with each other our experiences to make Bitcoin better by us all succeeding. There’s lots of different solutions that you can do because whilst, as we said earlier, this is a new area for a lot of people, there’s a small concentration of which Jesse and I are part of that. I’ve been investing in this space for a number of years now and, and understand the different things that have worked and also importantly, the things that haven’t worked. You can often learn more by things that haven’t worked for other people than you can from things that have worked for other people.
Preston Pysh [00:23:14]: One of the most fascinating aspects to all of this that I’m finding is in Japan the current policies are not accommodative for people to own Bitcoin through an ETF or anything like that. In the UK it’s the same scenario. And what it appears is that these treasury companies are an enormous back door that could end up turning into blackrock like vehicles. Because everything that we’ve just described in the dynamic that’s playing out and the balance sheet of your company, I mean, if I have to be honest with you, I think the balance sheet on your company is going to continue to blow minds just like Meta Planet did last year. That’s my expectation, to be quite honest with you. In this coming year when we listed.
Andrew Webley [00:24:04]: The business, I was in New York for a family holiday that I had planned before we knew the IPO date. So I was in New York looking around, fantastic city, and I went to the Rockefeller Center. Now when you’re queuing up to go to the top of the Rock, there’s a fantastic model of all of the buildings and it blows your mind, you know. And that was built, I don’t know, let’s say 100 years ago, something like that. Now to me, this reminds me of those sorts of times a hundred years ago when there was something so significant happening in the world that was not just the chance of a lifetime, but the chance of a hundred years. And I think this is what’s happening now. I’m sure Jesse has got some views on this as well, but I don’t want to get carried away at to ahead of our station here because, you know, we take a daily, weekly, monthly approach. We work hard every single day to grow the company, to improve every single week.
Andrew Webley [00:25:00]: But in a lot of ways these companies are going to be almost like, and I don’t like this analogy, but it’s the best one that I’ve got. You know, the banks of the future. And I mean that in a capital slash balance sheet perspective because ultimately what you’ve got with us is, is you’ve got a business that’s been publicly listed for two and a half months, that has got zero debt, that’s got a very low cost base, that’s got £150 million of effectively cash and Bitcoin. And it doesn’t take much to see how that’s going to turn into billions and billions that stored in the very best asset in the world that over the last 15 or so years has gone up approximately 30% a year. So it’s something that you’ve got to keep your feet on the ground about. But it’s tremendously exciting.
Preston Pysh [00:25:52]: It’s unreal. Yes, Jesse, go ahead.
Jesse Myers [00:25:55]: I agree and I think Andrew does a great job there of highlighting that it’s a building process. It’s funny how it kind of mirrors bitcoin’s development as an asset of in the early days, there weren’t sophisticated derivatives on it and the markets have slowly built out around it and it’s become a larger and larger asset in tandem with that development. And that’s what’s happening with these entities too. I mean, Metal Planet was a hotel business 15 months ago and now it still is. It still is. It still is. It still is. With one hotel and a giant balance sheet.
Jesse Myers [00:26:31]: And you know, increasingly they have more sophisticated derivatives built out around them. And you can kind of gather from the sort of hints they’re dropping of they’re moving towards preferred equities pretty quickly. And I, I think that will be a, a big step in advancing their playbook to tap into the bond market more directly, which is, you know, I saylor likes to use that chart of mine of showing the global asset landscape. And I think the reason he likes to use it is because the bond market sticks out there. There’s over $300 trillion in the world stuck in the bond Market getting mid single digit returns. Yep. This is the chart here. You know we’re now up to a thousand trillion dollars of global asset value.
Preston Pysh [00:27:14]: A quadrillion markets a quadrillion which I’ve always, I’ve caught myself saying the same thing you just said, Jesse. And then somebody corrected me like Preston is just a quadrillion. I was like, I guess it is.
Jesse Myers [00:27:26]: I do say a thousand trillion just because people don’t know what a quadrillion is. So you know, you’ve heard of a trillion. But anyway that’s where we’re at now. And of course most of that is because the fiat money keeps losing its purchasing power. So it’s not that assets are becoming more valuable, it’s that the dollar is becoming less valuable. And that’s true across all fiat currencies. And when you look at this chart you see the bond market, there’s this giant pool of capital that is getting, you know, in the US you get 4 1/2% on a 10 year T bill and any decent bond is risk adjusted somewhere at mid single digits. And then here’s Sailor turning around and saying I’ll give you 10% if you give me your bond capital and I’ll turn around and buy bitcoin.
Jesse Myers [00:28:09]: As Andrew pointed out, I know bitcoin’s going to grow at 30% a year and I’ll have no problem servicing that dividend expense of 10%. And so that’s what strategy is now pivoting towards. And that will be the fuel source for them to continue to grow and continue to deliver bitcoin yield going forward. And I think they’re going to become the most valuable company in the history of the world by a very large margin. As a result of what’s happening. Meta Planet is now I think shifting into that stage of its life cycle as a, as a bitcoin treasury company. We’re earlier in our development. It’s, you know, it’s still kind of the ground floor in many ways but there’s a path forward that Meta Planet has now kind of refined for us to follow of how you become the leader in your capital market.
Jesse Myers [00:29:01]: And I think it’s going to be a winner take most in each capital market in the world and eventually you can add on these preferred equities to make that value proposition to bond market capital in your country and tap into that as a fuel source for continuing to deliver on bitcoin yield.
Preston Pysh [00:29:20]: I love that framing a winner take most. I think you’re right on that. Real fast. I want to Talk about the mechanics of how you did this, Andrew. So in the US, everybody’s familiar with SPACs, if you’ve heard the term, and you don’t really kind of know what it is, it’s effectively, there’s no company there. What you have is a bunch of investors that put a bunch of money, call it a hundred million dollars into a public vehicle and then they go and find a company that they can invest some of that hundred million into to take it public. So it’s basically like a turnkey way of taking a company public. The shell’s sitting there ready to be used, and then when the private company is identified and purchased, then it becomes public.
Preston Pysh [00:30:03]: So in the uk, my understanding is that you did this reverse takeover of a listed shell. And is that correct?
Andrew Webley [00:30:12]: Yeah, similar. So what you would probably do a lot of the time is you would do exactly what you said. So it’s a bit like a SAP.
Jesse Myers [00:30:19]: Yeah.
Andrew Webley [00:30:19]: So you do a reverse takeover of a listed shell. We actually did a reverse takeover of an almost listed shell. So everything about what we’ve done has been a bit different and maybe that’s why it’s worked. So it’s relatively unusual to do a reverse takeover of an almost listed shell. I don’t think I’ve ever heard of one before, actually. So. So, so what we did is when. When I decided that I wanted to list my business, I reached out to somebody who’s our chairman and I said, look, you understand everything that I don’t understand about capital markets.
Andrew Webley [00:30:55]: So this person was able to fill in those gaps for me. And like a lot of the other things that’s happened in the business, it’s people meeting each other almost in a faint, like capacity at the right place in the right time. And he said to me, said, andrew, I love everything about what you’re saying, but just change this one a little bit. And I actually have got an almost listed shell that you can effectively have. So, yeah, it was very similar to what you described, slightly different. And the reason for that is that if you’re a business in the uk, it’s quite expensive to list a private business by being able to do it in this particular way. It was amazing because we could actually get it going in a less risky profile. And the compromise I made there is maybe I gave more of my business away in equity, but I still think that I got a very good deal out of it.
Andrew Webley [00:31:46]: It was just a compromise to allow me to get that done quickly, efficiently, with the experience of others. So that’s how we did it really?
Preston Pysh [00:31:55]: Jesse, we’ve been talking about for years about how fixed income has been bid for, for decades and how all of this pressure has been built into these capital markets. And when you look at a company that’s private versus one that’s public and that they’re able to kind of punch a hole into this pressure tank of capitalization that’s occurred for four decades, you can see how it’s just, it’s literally just spewing out onto the balance sheet of these companies. It’s mind bending to me to see this playing out in real time.
Jesse Myers [00:32:31]: I think you nailed it. The sort of mental image I have for bitcoin treasury companies is as something of like a release valve for over bid up equities valuations. And then, you know. Yes, it sound, it sounds crazy that you’re buying bitcoin at a 6M nav. Right. It does premium, but, but it’s delivering in this sort of PE ratio way in under a year. Or you can keep buying Apple and wait 35 years to get your money back. Yeah, I think in that way we’re seeing just the early stages of a flood of capital exiting from the overpriced traditional market assets into Bitcoin.
Jesse Myers [00:33:18]: Treasury companies, because of what they’re delivering on the Smarter Web has 1275 Bitcoin right now. So just, you know, just over a thousand bitcoin. And that’ll be very hard for almost any company to achieve 10 years from now. Right. And that’s happened here in three months. And we’re adding at a very rapid rate and we’ll continue to do so going forward. You know, where is value here? Like, I think it’s quite clear that investors are realizing that this model, while different from a traditional income statement PE ratio valuation of an equity, this is delivering massive value very quickly as we’ve seen with Meta Planet, as we’ve seen with strategy over the last five years. And I think this is just the beginning of what will really become an industry.
Jesse Myers [00:34:05]: It’s already blossoming into an industry of bitcoin treasury companies repricing capital in the world and helping that capital flow from overvalued traditional markets into undervalued bitcoin. And specifically here, companies that are designed to increase bitcoin per share for their shareholders.
Preston Pysh [00:34:27]: I, I’m thinking through this and I love how you’re comparing it to pe and it’s almost like days to cover is the inverse of the PE for like that’s really the metric to kind of look at is this days to coverage from a value standpoint. Is that right in the way I’m framing it?
Andrew Webley [00:34:47]: Really interesting and I’ve never quite thought of it in these terms, but chatting to you and Jesse now, one thing that is a bit out there and a bit extreme, but if you think about days to cover in the sense that that gives you your true valuation and then you think about the typical P in terms of years, it’s quite mind blowing in the sense that we’re talking about, you know, one month, one and a half months even in the biggest companies, you know, two years or whatever. Whereas if you buy Apple stock or Nvidia stock or any of these other fantastic companies of which I own some of them, you know, you’re talking 10, 20, 30, 40 years, you know. So in a lot of ways, whilst I don’t want to get carried away again and I’m going to have to think this one through very carefully later, but Bitcoin treasury companies are absolutely a screaming buy if you think that you can get that value of what you’re buying back in such a short time period. So either the stocks are ridiculously expensive or the bitcoin treasury companies are incredibly cheap or maybe it’s somewhere in the.
Jesse Myers [00:35:53]: Middle, you know, it’s certainly both. I think, yeah, Andrew’s quite right that there are things to remain grounded about, you know, winner take most and there’s going to be a lot of competitors that pop up claiming to do something, aspiring to get that marketing boost of, oh, we’re now a bitcoin treasury company that are either not set up to do it or don’t have the follow through commitment. I mean we’ve seen Gamestop sort of trot into this sort of positioning as we’re going to do bitcoin and then they kind of half assed it and the market didn’t like that. Right. So there’s ways to do it right and there’s ways to do it wrong. And I think the reality is the vast majority of companies that set out to do something like this will not do it well enough. And so investors do need to be careful that they’re picking the right one because it will be winner take most and you need to make sure that you’re positioned accordingly.
Preston Pysh [00:36:46]: So one of the things that I think is super important for anybody to wrap their head around listening to this conversation is Bitcoin has annualized volatility of about 80% on an annualized basis, anywhere from 60 to 80% annualized.
Preston Pysh [00:38:05]: And so although we’re all very enthusiastic about this, there are massive volatility risks associated with it. When we’re using this metric days to cover and if we would treat that like earnings and it’s in days versus 30 plus years for some of these other companies that that we’re more accustomed to from evaluation metric, you always have to ask yourself what you get in one in one advantage, which is stability. In this old system where you don’t have to worry about that much volatility, it’s all been just like purchased out of the stock. The advantage you get over here is value potentially if you buy into the whole bitcoin thesis, which we all three obviously do. But what you get with that is intense volatility.
Jesse Myers [00:38:49]: Yes.
Preston Pysh [00:38:49]: And people just have to deeply understand that.
Jesse Myers [00:38:52]: Just to to add to that of I, I think Michael Sailor kind of pioneered this phrase, but I heard it most from the Meta planet community of volatility is vitality. When it comes to this strategy in particular. Like you want volatility because that volatility skews to the upside. That’s the important thing to know about volatility in bitcoin in general and certainly in bitcoin treasury companies in Trad 5 people are afraid of volatility. It’s a scary word because volatility is associated with sharp down days. Volatility literally skews. If you look at the histogram of volatility it skews negative. But in bitcoin it skews very strongly positive.
Jesse Myers [00:39:30]: You want that volatility and Bitcoin treasury companies amplify bitcoin’s volatility.
Andrew Webley [00:39:36]: Having responsible portfolio management is important though.
Jesse Myers [00:39:39]: Yes.
Andrew Webley [00:39:39]: If you take myself I obviously love the sector, not quite 100%, but almost 100% of my wealth is in bitcoin treasury companies and Bitcoin. Very little in anything else because I think it’s the best thing ever and I’m incredibly passionate about it. And I also run a bitcoin treasury company, but take my mum or my brother or anyone like that, best friend, I don’t know, 5%, 10%, something like that of their liquid portfolio. So people need to, like with everything investing, they need to understand what they’re investing in and they need to get those percentages right. You know, Jesse and I, we love bitcoin treasury companies because we love maths. Yeah. So we understand percentages to a degree. Now an investor thinking about investing in this particular space, they need to understand what percentages mean and maybe slightly longer term they need to understand rebalancing.
Andrew Webley [00:40:34]: You know, as an example, even somebody that was very old, that was nearing their retirement, I would probably suggest that they need an allocation to Bitcoin alongside the allocation to whatever boring thing that they’ve invested in that ironically won’t perform very well if it’s bonds. So they take the volatility and they use the percentage allocation to smooth it out. That’s what I would recommend to know.
Preston Pysh [00:41:01]: Well, you’re. Yeah, you’re about to be in the preferred market, which is going to give that type of person that’s getting ready to be in retirement exactly what you just described. I want to talk about this real fast with you guys. This is the last topic I really want to get into and sorry, Jess, I don’t even think we’re going to get to your slides here.
Jesse Myers [00:41:18]: Jesse, I’m not time Preston.
Preston Pysh [00:41:20]: I want to talk about preferreds. So I’m sharing a back and forth that I had with Josh man, who you know is an incredible thinker, absolute incredible thinker. And he, he brought up this idea that Stride has this option to basically rug pull the coupons because they’re non cumulative. And I’ve been thinking about this and I think some others in this space have been thinking about this and you hear Michael going around, he says, you know, it’s money I can borrow forever, that I never have to pay back. And like when he says it, I’m thinking to myself, why is he saying it like that? Why is he saying it like that? So what I did is I did a discount cash flow analysis of the dividends of a perpetual dividend. This is a preferred stock that you have to pay the dividend forever and they’re cumulative. So if you miss payment, they just add up and then you eventually have to make that before anybody else below, you can receive dividends in the future. And what I found so fascinating is when you apply the power law, let’s say Bitcoin continues to go on this power law and its return is diminishing each year.
Preston Pysh [00:42:36]: The percent that it’s growing is diminishing each year, but it’s still growing very aggressively. But if I use that as my benchmark for what the underlying Bitcoin value is, what I did is I plotted out these dividend payments for the preferred, and what I found is that after about 10 years, this is what the effective dividend is compared to the Bitcoin that was raised in the initial issuance of the preferred stock. So this is the $8 annual dividend compounded. So at issuance, the dividend would be here. After the first year, that dividend, because bitcoin’s continuing today, is compounding at about 40 to 50% percent annualized. So that $8 dividend turns into like $5 and 20 cents the year after that, that dividend’s down here at about $3, then it’s at about 250, then it’s at 2, and you can see it about 10 years. Look at where you’re at. You’re almost at zero.
Preston Pysh [00:43:36]: If Bitcoin continues to perform the way that the power law suggests it’s going to perform over the next 10 years. So for a person that issues this preferred stock 10 years later, the dividend payments are de minimis compared to what people think it is in nominal dollar terms today. They call this perpetual drag. When you got a dividend that you’re going to pay on a preferred, it’s perpetual drag, especially one that’s not callable. This is the really fun part. So this top line, this orange is if you add up all these dividend payments, this is the net present value of the issuance itself. Okay? Based on this valuation system that I applied using Bitcoin in the power law to this preferred issuance, this is in the MicroStrategy one, this came on the market, I want to say it IPO’d at around 86 to 90 a share. And according to this discount cash flow model, the real value, if you put it in bitcoin terms, is around like 18 bucks or 18.
Preston Pysh [00:44:43]: Yeah, $18 versus the 86 that it came on the market for. If you’re using bitcoin as your unit of account as opposed to dollars, and this is a perpetual Right. I only did it for 20. A person who’s, like, really into the math on this stuff, they say, well, this goes on forever, and you only did 20 years. I. I look back at that person, I say, yeah, but, like, look at the chart, and you can see it’s maxed out. Like, okay, yeah, it’s. It’s $18.34 instead of 25 cents.
Andrew Webley [00:45:12]: The reason why that’s possible is because of Bitcoin. So obviously, if you believe in bitcoin, like we all do, that’s the most important thing. But then it makes perfect sense. But what you’re able to do is you’re. You’re able to offer pretty much unlimited stock because the investment that is generated is going into the best asset in the world as opposed to going into a business to grow, say, a particular type of microchip or a particular type of computer software. So, you know, in some ways, the money going into Bitcoin, if you’re not comfortable with that, that’s the risk. But in return for that, you’re not being exposed to, you know, the management risk, the idea risk, you know, the limited life cycle of the thing that’s being created. Yeah, it’s going into Bitcoin.
Andrew Webley [00:46:05]: So that’s the reason why that works. And then if it was a traditional business, they might only want to do, say, $100 million worth of the prep stock, for example. But as a potential issuer of the preferred stock, you can take billions and billions and millions of dollars into that if there’s demand for it, and know that you can do that model. So what’s pure genius?
Preston Pysh [00:46:27]: Well, what I would also say, so a person who would see that slide and hear what we just said, they say, so you’re ripping people off by issuing these preferred stock. And what I would come back to that person and say is, no, you’re providing an 8, 10% dividend that they can’t get anywhere else with the risk profile that they’re getting it of whether it’s actually going to be paid back. This is back, call it 10 to 1 or 5 to 1 or whatever your metrics are, which I don’t know, but I would imagine they’re in that ballpark. Well, when you guys do this, which I’m assuming is going to be soon.
Jesse Myers [00:47:02]: It might take some time.
Preston Pysh [00:47:03]: It might take. Okay, so you got to build a.
Jesse Myers [00:47:05]: Certain balance sheet first, I think.
Preston Pysh [00:47:06]: Yeah, but I mean, a thousand Bitcoin, I mean, in six months could be.
Jesse Myers [00:47:12]: Right.
Preston Pysh [00:47:12]: And you guys will have more than a thousand at the rate you’re going, let’s just use micro strategy since we know what those numbers are. It is heavily capitalized way more than what the issuance is. Okay. And so you’re getting this 8 to 10% dividend. Your bottom withdrawal, like the value that it could drop to, is limited in an extreme way because the dividend is there. So the fact that you have this dividend, paying it out somewhat caps the bottom side of it. And then on this one, on the strike issuance, as an example, because it actually has a convert piece to it, you’re getting 80% of Bitcoin’s underlying performance in the preferred stock itself, which is crazy. So for a person who needs.
Preston Pysh [00:48:01]: So, yeah, a person who needs income, like, I mean every boomer in the world is starved for some type of income out of their investments. One, just like full stop, he’s capitalized.
Andrew Webley [00:48:14]: That to approximately 4%. So he’s issued approximately, approximately 4% of the balance sheet as prep stock with the different types of prep stock. So it’s, it’s pretty cautious. You know, it’s a fantastic set of products. You know, there’s no doubt about it. And to expand on Jesse’s point, you know, we probably need to be five times the size. I would suggest to do that. So, you know, without making a prediction, six months, one year, I mean, based.
Preston Pysh [00:48:40]: On the math, you guys are 35 days to cover, right? So is that the, is that the quick math that you’ll be there in six months?
Jesse Myers [00:48:48]: It is historically looking. And the reality of this math is it has to slow down as you scale, so it will be harder to do the next cover than the prior cover. That’s just the math of it. But, you know, it won’t slow down.
Preston Pysh [00:49:01]: And a lot of this math, I think this is important too. A lot of this math is dependent on us continuing to be in a bull market in Bitcoin.
Jesse Myers [00:49:10]: Yeah, that’s right. And us continuing to be in a seismic shift in how people allocate their capital. I think that’s what’s really different here, is that this is a little bit beyond Bitcoin’s cycles. What’s happening now with Bitcoin treasury companies is a systemic shift of value reallocating to where there’s a better value proposition than buying Apple.
Preston Pysh [00:49:40]: I loved this conversation. I think this is crazy, illuminating. I think it’s sending shock waves, absolute shockwaves in the process of security analysis, period.
Jesse Myers [00:49:53]: Yes. Yeah. And it’s very interesting that this is happening on Bitcoin Twitter and in Bitcoin circles, like people are figuring out on the fly that these things are undervalued. And, yeah, you’re paying a premium versus the bitcoin holdings, but it’s because of what it can deliver in the future. And when you run that math, this is unbelievable. I’d also say that, you know, I think there’s a place in everyone’s portfolio for bitcoin spot Bitcoin. There’s also a place for risk in Bitcoin. And I think for me, Bitcoin treasury companies are, are the value proposition that I find most compelling in terms of that framework.
Preston Pysh [00:50:30]: I’ve got one final slide. I, I lied here. We are going to put up one more slide that you, you made, Jesse. And this goes to the point that you just made because your opinion is that this is what’s playing out right now, correct?
Jesse Myers [00:50:42]: Yeah. I’ll walk you through this. So this originally came from an article I wrote called Asset DNA, which built on Pierre Rashard’s speculative attack piece. And it was in the very early days of strategy. They had just done their first convertible note in late 2020. And I wrote this to describe, you know, what’s happening here, like, why, why does it make sense for strategy to borrow and borrow dollars and buy Bitcoin? And this was the summary view of it, minus this top line, which is Bitcoin treasury companies, which I added this year. But the reality of assets, in my view in the world right now is that assets perform in different ways. Yeah, with equities, you’re going to have some degree of return.
Jesse Myers [00:51:27]: But Bitcoin, because of its endogenous properties and its early stage of adoption, has more attractive properties than anything else out there from an investment point of view. So if you can borrow dollars to buy Bitcoin and then wait for those properties of those assets to play out, the dollars will decrease in purchasing power that you owe and the bitcoin will massively grow in purchasing power, allowing you to settle up that debt or roll that debt or whatever in the future. And it will have worked out for you or the company to have done that. And so this is that summary view of, like, this is why those mechanics make sense and why strategies started doing what they are doing. And I added to it this year because I realized that now, in my view, there’s an asset class that can perform better than Bitcoin, and it’s Bitcoin treasury companies, specifically, because their entire goal and their mandate from shareholders is to accumulate more Bitcoin per share. So the only thing better than bitcoin is more bitcoin, as Saylor likes to say. And Bitcoin treasury companies are designed to achieve that. Yes, it comes with some risk because you have to execute on that.
Jesse Myers [00:52:40]: You know, there’s custody involved. You can’t do self custody with like you can with your spot Bitcoin. But all in all, that value proposition, I think risk adjusted is the most compelling thing in the world right now.
Preston Pysh [00:52:52]: I love it, gents, I loved it. I love this conversation. If people want to learn more about your company, Andrew, give them a handoff. And Jesse, anything else that you want to add after Andrew?
Andrew Webley [00:53:05]: So the best thing to do is to go to our website, which is www.smarterwebcompany.co.uk or if you’re on Axe, just go to Smarter Web uk or you can find me personally on Axe, which is A S, J, Webley Web L, E, Y. Any of those places are good. There’s loads of information on our website, loads of information on X, great community on X. And then over to Jesse.
Jesse Myers [00:53:34]: The one thing I’d add is we sort of talked around it a little bit, but I think that there’s a winner that will emerge in each capital market. And this is my view. It’s also the view of UTXO Management, which was the seed investor in metaplanet and also in Smarter Web. And I think that’s right. I think that what’s happening here is that there will be a winner take most in each capital market. We’ve seen that in the us, that’s strategy, We’ve seen it in Japan, that’s Meta Planet. And right now there’s a race for that in other capital markets too. Smarter web has a.
Jesse Myers [00:54:09]: A 10x lead has emerged as the, you know, the first out of the gate doing it right in the UK with a 10x lead in terms of Bitcoin held and in market cap and every other metric you want to, you want to come up with. And that makes it a very exciting time for us at Smarter Web and for our, the community that’s developing around this because we’ve seen what metaplanet was able to do by following the same path over the last 15 months. And it makes it a very exciting opportunity for us to just continue delivering on that same playbook that they’ve laid out so nicely. And I think that will also happen in every other capital market in the world and it will happen fast. It will happen in the next year. So now is the time for people to pay attention to what’s going on and also I think an opportunity for everyone to make the most of it.
Preston Pysh [00:54:59]: I love it. All right, guys, thank you for your time. We’ll have all the links in the show notes to that. And thanks for joining me.
Jesse Myers [00:55:07]: Strategy has a monopoly on the issuance of mstr. And I think this is really what differentiates it from an etp. And so with the case of mstr, that value exclusively accrues to strategy because they are the only ones that can create more MSTR shares and that that benefits the common stock, you know, from that accretive dilution perspective.