Latest / TFTC: A Bitcoin Podcast / #676: Building the First Bitcoin-Focused SPAC on NASDAQ with Andrew Hohns & Jonathan Kirkwood

Transcript

#676: Building the First Bitcoin-Focused SPAC on NASDAQ with Andrew Hohns & Jonathan Kirkwood · TFTC: A Bitcoin Podcast

• 0:00
  Gentlemen, Jonathan, welcome to Philadelphia.
• 0:04
  It's good to be here, Marty, and this is the first time I've actually been on your podcast.
• 0:11
  Really?
• 0:11
  Glad to, yes, glad to be here.
• 0:14
  You weren't in Austin in 21 when we did it outside in my porch.
• 0:20
  How was New York yesterday? I guess we'll start there, jumping right into it.
• 0:23
  I mean, surreal, again, to be in New York, to see BTC, you know, on the NASDAQ, being able to be there for the closing bell, and then, you know, walking outside and seeing, you know, a company that, you know, we're looking to do something, you know, monumental with, you know, on the large screens in Times Square.
• 0:50
  Yeah, it was great. I mean, they put together such a nice ceremony for ringing the bill at the NASDAQ. But Jonathan and I had the privilege of being there earlier this year with Fold and the Fold listing.
• 1:05
  And we thought, wow, that was really incredible to be there for this first pure play Bitcoin, NASDAQ listed company.
• 1:13
  And then to be there again within the same year with the launch of BTC Development Co., as Jonathan says, I think it's really a great signal of things to come.
• 1:24
  Yeah, I think this year with the price movement being relatively flat, I think we're up 11% since the beginning of this year.
• 1:32
  despite that. I think the work the three of us and everybody on our teams at 1031
• 1:38
  and Battery has been doing behind the scenes and many other people in the industry really to
• 1:43
  build the foundation to send us to for this next phase of Bitcoin adoption as digital capital. We
• 1:51
  were just talking about that before we hit record. It's a term that I've been a bit averse to, but
• 1:57
  it's growing on me. And I think what we're doing with the SPAC sort of highlights that,
• 2:02
  really trying to do something unique and partner with a great management team to do something
• 2:10
  special. You guys have been working on this very closely. Andrew, I'll throw it to you.
• 2:16
  What are we trying to do here? Well, I would say at the front end, I've been
• 2:21
  really thrilled by the adoption of Bitcoin among publicly traded companies.
• 2:29
  But the ones that have announced so far have, for the overwhelming most part, been Bitcoin
• 2:37
  treasury companies or Bitcoin industrial companies like miners. And you've seen very few,
• 2:44
  let's just say companies operating in other sectors add Bitcoin to their balance sheet as
• 2:53
  a source of corporate strength, corporate opportunity, growth, pointing toward the future.
• 2:59
  I mean, yes, you have Tesla has some Bitcoin on their balance sheet, Block, you know, but they're
• 3:04
  doing a lot in the Bitcoin space. Some larger companies, high profile, SpaceX also has Bitcoin
• 3:10
  on their balance sheet. But I've been surprised now since strategy's been so successfully
• 3:16
  developing its Bitcoin treasury strategy for more than five years that we haven't seen at least one
• 3:24
  or really a half a dozen high profile household names, whether it be, you know, Nestle or Fruit
• 3:33
  the loom, Haynes, or Procter & Gamble, or someone, Tootsie Roll, somebody add Bitcoin to the balance
• 3:44
  sheet. And what we're doing with the BTC Development Co. is really, let's say, raising a
• 3:53
  flag for the idea that ambitious businesses, growing businesses, businesses that have a specialty in
• 4:02
  their area can benefit by adding Bitcoin to the balance sheet. And we're looking to invite them
• 4:07
  to work with us to recapitalize their businesses with Bitcoin.
• 4:12
  And this is something we were discussing out in the foyer here before we came in to record,
• 4:18
  but it is pretty astonishing when you look at the numbers and what it takes to break into the top
• 4:22
  100 companies that have Bitcoin on the balance sheet. And you've been looking through that for
• 4:26
  the last few days. Yeah, I mean, I was just on the Bitbo.io Treasury's website, and they say that
• 4:35
  there are 153 publicly traded companies that have Bitcoin on the balance sheet, and the 100th one
• 4:42
  has 26 Bitcoin. So if you have more than 26 Bitcoin, you could be at this moment in the top
• 4:48
  100 publicly traded companies. And they list 34 private companies. Now, of course, that's not
• 4:53
  comprehensive because there are many private companies. If you read the River small business
• 4:57
  report, they're talking about all of the small businesses that have been adding Bitcoin to the
• 5:01
  balance sheet, but 34 right now that have somehow made a public filing about their Bitcoin.
• 5:07
  And Rayel Bedford, it just stood out to me because it's a well-known company in the space,
• 5:14
  the soccer team from Bedford, United Kingdom. And they're reported as the 20th largest privately
• 5:21
  held holder of Bitcoin with 82.7 Bitcoin on the balance sheet. So it's a point where, you know,
• 5:29
  the SPAC that we just raised, $253 million, it's called BTC Development Co.,
• 5:36
  trades on the symbol BDCI on the NASDAQ. The idea is to merge with a privately held company
• 5:48
  and to use all or substantially all or a very large part of the proceeds
• 5:55
  to add Bitcoin to the balance sheet of the NUCO,
• 6:00
  which will then benefit from the public listing.
• 6:02
  And so you imagine $253 million, if $200 million is used to buy Bitcoin,
• 6:07
  obviously depending on the price, that could round about the $2,000 Bitcoin
• 6:12
  on the balance sheet of a company.
• 6:14
  And with Bitcoin at $500,000, with Bitcoin at $1 million,
• 6:18
  over the course of the next four years or in the future.
• 6:23
  Now you're talking about a company that would have,
• 6:26
  just in its treasury, a billion, $2 billion, maybe more,
• 6:31
  and they can borrow against that.
• 6:33
  They can use that for strategic purposes.
• 6:35
  So I think there's a lot of rationale early
• 6:38
  to put a significant amount of Bitcoin
• 6:42
  on the balance sheet of an interesting company.
• 6:45
  And Jonathan, I'm going to put you on the spot.
• 6:46
  we like to provide alpha on this show. And I know you're working on a piece right now about digital
• 6:52
  capital, but really to build what Andrew's saying, to paint the picture of the opportunity
• 6:57
  and what we think Bitcoin represents for companies specifically, why don't you explain
• 7:03
  what you're working on this piece? Well, to tie in kind of the first part of the conversation,
• 7:11
  and then I'll go into this idea that I'm pulling on for digital capital.
• 7:18
  You know, in the conversations that we were having yesterday
• 7:21
  in the last six years that we've been building 1031
• 7:24
  and, you know, decade before that we've been in the space,
• 7:29
  you know, we continue to find out, like, we're early.
• 7:32
  Like, this is still early.
• 7:34
  We're right, but we're early.
• 7:37
  I mean, it's early that a top 100 company in the public market has 26 Bitcoin.
• 7:43
  I mean, that to me, that is a glaring signal how early we are.
• 7:48
  And every year that I'm in Bitcoin, I just realize, man, we're that much earlier than
• 7:54
  what I thought I was the year before.
• 7:56
  And so the interactions with people who move first in Bitcoin have the largest outside
• 8:05
  advantage.
• 8:07
  I mean, that is absolutely true if you got into Bitcoin in 2010, 2012, 2018, 2022.
• 8:13
  Your ability to acquire more digital capital, the sooner you make the move, the larger that allocation to the 21 million.
• 8:23
  And the ability to do that is getting easier because adoption is increasing.
• 8:32
  but we are still extremely early where we're the first, you know, BTC stack that was, you know,
• 8:42
  announced to ever be created. Like we created it. Like this is the first. So we're marking,
• 8:48
  you know, this time in history where Bitcoin is being more accepted. And the fact that we were
• 8:53
  there at the bell ceremony twice this year, I mean, that has never existed before until we did it.
• 9:00
  So the time is now. And so going, you know, building off of that to where we are today and how we're, you know, thinking about this idea of the digitization.
• 9:12
  Like, what is that? What does it mean? So as a business, you have land, labor and capital.
• 9:19
  That is what makes up your business. And I think that we've already gone through the first revolution of the digitization of land,
• 9:27
  where you dematerialize the storefront and now it's a website, it's a URL. So any business that
• 9:34
  adopted the digitization of their storefront was able then to scale without having to have the
• 9:41
  brick and mortar. We are in the first innings of the digitization of labor where with LLNs,
• 9:50
  the new AI models, an expert can no longer need kind of the long list of kind of lower analysts.
• 10:00
  They have a lot more power at their finger chest. But also for your individual, they can now become
• 10:08
  an expert, an assisted expert in certain fields or gain an understanding, being able to interact
• 10:15
  with the marginal cost of electricity. The second wave of the digitization of labor, I think,
• 10:21
  is going to be the humanoid robots, where your initial CapEx, you have a humanoid robot that
• 10:27
  then will be able to operate any manual task. And so that's the digitization. It's very tangible
• 10:33
  where it is sucking up the oxygen in the capital markets. And we're seeing the vast majority of
• 10:43
  kind of winnings from companies like NVIDIA that are actually a software company, but solving the
• 10:50
  physical constraints of building out of data centers. And so we're seeing that in real time.
• 10:55
  But the digitization of capital, I think that we've already seen how that plays out. Like
• 11:03
  Bitcoin is the winner of the digitization of capital because of the scarcity of it. If we're
• 11:12
  going to have abundance in the digitization of labor, then scarcity reigns supreme. And the
• 11:18
  digitization of capital, which is Bitcoin, is being adopted today. It's very early in that adoption.
• 11:25
  And that's what we're leading. And that's what we're pushing for with businesses, such as the
• 11:30
  ones that we've invested in through 1031, but then also trying to bring in businesses outside of
• 11:37
  They're quite in traditional legacy, either finance or industrial that want to exchange equity for this new digital capital because they know that you have to have the digital capital to be able to operate in the future.
• 11:53
  Yeah, this is something we talk about probably every week, particularly with prospective LPs at 1031 is similar to the internet, the digitization of land, everybody going, having e-com storefront.
• 12:08
  And now today, everybody's an internet company when the internet wave came.
• 12:12
  And similarly, we believe that everybody's going to be a Bitcoin company.
• 12:15
  ultimately. They're going to need to use the best capital if they want to be productive
• 12:19
  and grow their business and store the value and the profits of that business that they
• 12:23
  accrue correctly And so I think this opens up the aperture to what many up until this point would have viewed investing in the Bitcoin space as people building infrastructure software hardware wallets mining infrastructure financial services
• 12:40
  But I think what we're trying to do here with this back really expands the aperture and really
• 12:45
  trying to pull in companies that you wouldn't think of as a Bitcoin company and help them
• 12:51
  realize that they can use Bitcoin to do what they do better, more profitably, more efficiently.
• 12:56
  Absolutely. I think that there are, for us in our conversations, it's been helpful for me to frame some of the advantages of putting Bitcoin on the balance sheet of a company.
• 13:12
  And I think there are many, but three primary advantages are Bitcoin as a treasury asset,
• 13:20
  Bitcoin as a frame for expanding the customer base and for marketing outreach, affinity,
• 13:29
  and Bitcoin as an improvement for either commercial processes or industrial processes.
• 13:38
  So, you know, the first one, Bitcoin as a treasury asset. If you put Bitcoin on the balance sheet of the company and you have the ability to hold on to that asset over the course of a four year, eight year period of time, historically speaking, you're in for a very significant expansion in the dollar value of that asset.
• 13:59
  and that gives the company options. It increases the market value of the company. It increases the
• 14:05
  enterprise value of the company. It makes it more financeable. It is a liquid asset. It's not like
• 14:12
  you're making an investment that you need a lot of things to go right and then four years or six
• 14:17
  years from now you might have liquidity. You actually have liquidity at every moment of time.
• 14:22
  So if something comes up, you can tap that asset for liquidity, either by hopefully not selling it or otherwise drawing financing against it.
• 14:32
  And again, if you look at the lower percentiles of historical Bitcoin returns, they've been growing at phenomenal levels.
• 14:40
  And so if you were to put even 100 Bitcoin or 1,000 Bitcoin on the balance sheet of the company today, 1,000 Bitcoin, $100 million, you could realistically expect over a four to eight year period of time that that was going to be worth $500 million, $1 billion.
• 14:56
  And that would be actually below trend growth for the Bitcoin.
• 15:04
  And as it appreciates, not only could you acquire other companies or invite other companies to merge with you because they're interested in exchanging their equity for this growing base of digital capital, but you can also pull financing supported by that Bitcoin.
• 15:22
  And right now, Bitcoin financing is available and it's becoming less and less expensive because more and more capital is entering into that market.
• 15:34
  And I think that's a trend that will continue.
• 15:36
  So over the course of the next cycles, a few cycles, the cost of financing supported by Bitcoin is likely to prove an advantageous cost of capital for a business that recapitalizes on Bitcoin today.
• 15:50
  The second area, which is marketing and affinity, you know, Mike Germano had a great presentation two years ago at MicroStrategy World, and he said, Bitcoin is the best brand.
• 16:04
  And he went through, he said, look, this is one of the most recognizable logos in the world, which is remarkable because there's not a dollar of ad spend by Bitcoin, the brand, you know, because there is no Bitcoin board of directors, open source projects supported by everybody in this global community that is really pointing toward a sound money future and a digital future.
• 16:27
  But for companies that embrace Bitcoin, and not just as a marketing gimmick, but actually integrated in the ethos of their activities, they stand to attract a very interesting clientele and a growing clientele.
• 16:41
  A clientele that has a lot of disposable income, has habits of saving.
• 16:47
  A clientele that feels very strongly about the mission of Bitcoin, which is quite interesting.
• 16:54
  So there's a lot of a lot of customer expansion that's possible. And the last one, commercial industrial processes. I mean, if you're a business that has payment processing or if you're a business that has heating in some element of your supply chain or if you're a business that has, you know, cybersecurity needs and who doesn't?
• 17:15
  everyone has cybersecurity needs. There are utilities that exist right now on Bitcoin and
• 17:21
  many more that will be built in the future that lower the cost of payment processing, that create
• 17:25
  indirect heating as a byproduct of Bitcoin mining, and that provide cybersecurity through things like
• 17:31
  Cyberdomes. I mean, imagine if you could protect your corporate email server, not by paying a fee
• 17:39
  to a company that provides email protection,
• 17:43
  but by holding Bitcoin on your balance sheet
• 17:45
  and saying we're only going to accept inbound emails
• 17:49
  from other servers that have a certain minimum amount of Bitcoin.
• 17:52
  And if each message doesn't have a small digital stamp
• 17:56
  of 250 sats or 25 sats on it,
• 18:00
  it just bounces off of the cyberdome.
• 18:02
  And now you have protection against phishing and spam
• 18:06
  instead of as a service.
• 18:08
  it's a service of the Bitcoin.
• 18:12
  And as that asset grows in value,
• 18:14
  you enjoy that appreciation as well.
• 18:16
  So I think that when you start to think about
• 18:19
  the different frames of how a business
• 18:22
  can profitably integrate Bitcoin,
• 18:25
  it drives more efficiency.
• 18:27
  And what Jonathan was saying the other day,
• 18:29
  which was super interesting,
• 18:30
  was what it can mean for employees too.
• 18:33
  Yeah, we think, I mean,
• 18:36
  We've seen this with businesses.
• 18:39
  And so I'll touch on a few of those because I think there's definitely something to further dive in.
• 18:45
  But, you know, businesses that are being able to provide Bitcoin to their employees.
• 18:51
  You know, the greatest, you know, cost center for any business is human capital and the cost of payroll.
• 18:59
  And if you have the ability to incentivize staff to stay on longer and have less churn, then that's a benefit to the overall business.
• 19:12
  And so providing capital, this digital capital and Bitcoin to your employees, invest over time.
• 19:19
  They're not you're not diluting the equity of the business.
• 19:23
  You're providing the capital to the employees is another lever of incentive that you can provide.
• 19:29
  But, you know, to touch on that last point, you know, we're seeing with the digitization of labor with the LLM, the ability to create video and spoofing and that cost.
• 19:47
  Now, that barrier to be able to do that is exceptionally low.
• 19:51
  And so there is absolutely going to have to be a need or there is a need that has to be
• 19:57
  satisfied to for my attorney that has to be paid for.
• 20:01
  If I'm going to look at an email, if I'm going to answer a call, it has to have some
• 20:07
  type of value being transferred because the cost to reach me now is zero.
• 20:12
  And that is we're just inundated with so much like false information, I don't want to say false information, but false advertising, false attacks or vectors to be able to try to gain my information or gain my accounts in some way that we have to have a modality to prevent it.
• 20:37
  I'm going to touch on a couple of points that you gentlemen just brought up, starting with
• 20:41
  the last one.
• 20:42
  Going through my inbox is daunting.
• 20:46
  I don't like to look at my inbox anymore because to your point, it's just all AI slop that
• 20:50
  has just been thrown at all my email addresses.
• 20:55
  I don't like looking at emails.
• 20:57
  It's funny because it's a return to what Atabak originally built with Proof of Work when he
• 21:03
  launched it in the 90s was to prevent email spam but unfortunately his proof of work didn't have
• 21:08
  the difficulty adjustment satoshi brought that in and maybe we will find her i think we will we
• 21:13
  definitely will just looking at my inbox as a problem that needs to be solved be returning to
• 21:17
  that and to your point on brand and thinking long term i see this with my children i'm a five-year-old
• 21:23
  a three-year-old i also have a seven-week-old thank you he's not cognizant enough to get it
• 21:28
  You look very good for having a seven-week-old.
• 21:30
  Thank you.
• 21:32
  The five-year-old and the three-year-old, they recognize Bitcoin, the brand.
• 21:36
  Obviously, their father is immersed in the industry, but they just know, they see the
• 21:42
  Bitcoin B and they go, oh, Bitcoin.
• 21:44
  Like, they know that.
• 21:44
  And like thinking long-term for businesses that want to be sustainable and be in it for
• 21:49
  the long run, that's funny because we were having this discussion only a few weeks ago
• 21:53
  in Utah at our portfolio retreat.
• 21:55
  And it's Shatterhouse Rules.
• 21:57
  We won't say exactly what was said, but thinking of these generations that are coming up, they're going to recognize Bitcoin as a brand.
• 22:03
  They will recognize Bitcoin as a brand.
• 22:05
  But to touch on our portfolio, we've been investing in companies that operate within Bitcoin in multiple ways.
• 22:16
  But we've always making the decision to invest in the company.
• 22:21
  Do we want to part with the digital capital for equity as kind of that first hurdle?
• 22:27
  And then when we make the investment into the company, we're always telling the company, OK, we think that you should keep a portion of the capital that you raise as long term capital.
• 22:38
  That is this your Bitcoin. You need to be holding Bitcoin on the balance sheet for long term for all those reasons that you pointed out.
• 22:45
  And so we see that kind of translating today with this Bitcoin development company in the same way that we think we can do that on a much larger scale where we're looking for businesses, you know, think of a market capitalization of $250,000, $500,000, $750 million that want to reposition a portion of their equity into digital capital for the same benefits that we're seeing kind of on the earlier stage.
• 23:15
  companies that have raised capital for all those benefits. But another fact is because of the
• 23:22
  appreciation of Bitcoin, you know, some of the companies that we've invested in have more value
• 23:28
  in their treasury than they've ever raised. And some of these are profitable businesses,
• 23:34
  and some of these are businesses that are at break even, that Bitcoin provides multiple
• 23:40
  attributes that allow that business to further flourish.
• 23:45
  And there's an intangible attribute. I had a conversation with Luke Thomas,
• 23:49
  a good friend of mine, starting a new company called Formable AI. But during that conversation,
• 23:54
  we had about a month ago, now at this point, he framed Bitcoin as the best founder coach you could
• 24:00
  ever ask for because that idea of the hurdle rate, the opportunity cost of your spending,
• 24:07
  Obviously, this is in the context of startups, but I think it applies to any business.
• 24:11
  There is an intangible sort of effect that Bitcoin has on business owners.
• 24:17
  I've seen it myself with what we're doing at 1031, what I'm doing at TFTC.
• 24:23
  It's hard to express, but you don't know it until you experience it yourself.
• 24:28
  And I think that is something that many people don't recognize.
• 24:31
  Yeah, I think this goes back maybe to, you know, we've, you know, have we corrupted this idea of capital? Capital is the productive use of money. That's the definition. And, you know, through the last 40 years, we've had the use of debt as capital, which had a decreasing interest rate up until recently.
• 24:55
  And because of that you were able to further expand and expand on the debt where now Bitcoin as digital capital is reinvigorating a productive use of capital that has expansion capability So the value of the digital capital that you replacing or that you putting on
• 25:15
  your balance sheet expands instead of contracts or drags like debt does on a business.
• 25:23
  I mean, Michael Saylor has been an incredible force over the course of the last five years.
• 25:34
  And I think that his work at MicroStrategy Now Strategy will be right up there with the greats of corporate history.
• 25:47
  You know, John Rockefeller and DuPont and Steve Jobs.
• 25:51
  I mean, he's going to be right up there. And the way that he is up there and the way that he is able to frame ideas is just he's extremely talented, a very special individual.
• 26:04
  And one thing that he said is that, you know, companies for decades now almost measure their success by leeching the patient, you know, by dissipating their own corporate energy.
• 26:21
  And they're doing that through dividends, which are not necessarily the most tax friendly.
• 26:30
  and so there's a cost to that, a cost to the investor, but also a cost to the company.
• 26:36
  I mean, income has its role for sure, don't get me wrong, but they're also doing it through buybacks
• 26:42
  and those buybacks, he's characterized that as an admission that the company doesn't really know
• 26:49
  what to do with the capital and they think they have too many shares outstanding, so let's go out
• 26:54
  and we'll reduce the number of shares. And companies are penalized, actually, for holding
• 27:02
  cash on their balance sheet. Investors think, well, this is not a good use of corporate resources.
• 27:09
  Let's take it over, reposition it. It should either be dividended out or a recapitalization,
• 27:16
  or we should do a big buyback program.
• 27:20
  And, you know, that means that companies are actually in a more vulnerable position
• 27:26
  because they don't have a lot of resources on their balance sheet as a whole.
• 27:30
  And what he said is with Bitcoin, it's actually quite a difference.
• 27:35
  It's an inversion of that concept where you can take Bitcoin, which is liquid,
• 27:40
  365 days a year, seven days a week, 24 hours a day.
• 27:46
  It's fungible.
• 27:47
  All Bitcoin is the same around the world.
• 27:50
  It's divisible into 100 million units right now, 100 million satoshis.
• 27:54
  It's universal.
• 27:55
  It's weightless.
• 27:56
  It's transparent.
• 27:57
  It is programmable.
• 28:00
  It's so many useful things, and it has tended to appreciate very powerfully over time.
• 28:04
  And so if you're a company and you put this asset on your balance sheet, you then have this radiating core of energy that's growing and you can use it to power all of the things that you're doing.
• 28:19
  You can use it for employee motivation and employee retention. You can use it to reward stockholders in the future with either future business growth, future acquisitions, or even maybe you're drawing future dividends against the Bitcoin as a very small amount of the outstanding notional value when looked at four years, eight years hence.
• 28:47
  You can use it for these industrial processes, commercial processes.
• 28:50
  I mean, it's such a powerful tool.
• 28:52
  I think that we're going to see a big rotation in terms of the household names of corporate finance over the course of the next probably 15 to 30 years.
• 29:07
  And the only companies in the S&P 500 that will stay in the S&P 500 30 years from now are going to be those companies which over the course of the next five to 10 years add Bitcoin to their balance sheet and embrace digital capital.
• 29:28
  The ones that fail to make this transition are going to fall out of the echelon where they've become very accustomed.
• 29:35
  The ones that do make the transition will be able to take advantage of all of their market position, their manufacturing facilities, their product offerings, their research and development and grow them stronger.
• 29:48
  And many new companies will enter into those ranks and they'll become tomorrow's household names.
• 29:57
  Just like 30 years ago, you could ask an investor who's going to be in the S&P 500, and people would not have said the list of technology companies that now dominate that index.
• 30:13
  Many of them weren't even founded yet.
• 30:15
  And we're going to see that same kind of rotation again.
• 30:18
  And I think that's what positions us well in the SPAC well, is that we have the expertise.
• 30:26
  I've been in Bitcoin for 12 years now.
• 30:29
  1031's been investing across the space.
• 30:32
  We've seen every company and every vertical in our somewhat niche industry right now.
• 30:37
  But to your point, it's going to grow.
• 30:39
  And we have the expertise and the capital to help supercharge your business.
• 30:45
  And that's what we're looking for.
• 30:46
  We're looking for companies.
• 30:49
  We're looking for strong management teams that want to adopt digital capital, that want
• 30:55
  to be the first in line to make that transition.
• 31:00
  You know, we're not solving tomorrow's problems with yesterday's tools.
• 31:05
  This isn't a rock that we're putting on a balance sheet just because we think that it
• 31:09
  can store value.
• 31:10
  This has all those attributes that you just talked about being weightless, programmable,
• 31:17
  infinitely divisible. I mean, that is new tools. That's a new ladder to reach new heights. We don't
• 31:27
  need yesterday's abilities to solve tomorrow's problems. And so being first, being early to
• 31:35
  Bitcoin, you have been rewarded. It is, you know, first mover advantage. And we are still in those
• 31:42
  very early days. Yeah, I mean, I guess I just want to build a little bit on what Jonathan is saying,
• 31:48
  which was, you know, in part, the point of doing this podcast is actually to invite inbounds
• 31:56
  from people we want to hear from companies around the United States, around the world,
• 32:03
  that want to embrace digital capital are looking for a turnkey way to really engage very powerfully
• 32:15
  with the Bitcoin ecosystem, to put a significant amount of Bitcoin on their balance sheet,
• 32:21
  and to benefit from the increased liquidity of a public listing. I mean, that's the point
• 32:25
  of talking about this here today is to really begin to build a mental map of who are the
• 32:35
  companies around the world that are tuned into this frequency. And, you know, we are looking to
• 32:42
  advance those dreams and to take those ambitions and really deliver them into
• 32:51
  a NASDAQ listing, which is, you know, I mean, to be at the bell ringing ceremony yesterday,
• 32:58
  they have this, and one lucky listener today will join us, and hopefully more than one,
• 33:05
  because we'll do, you know, we'll do more than one of these, because I think there's a deep vein
• 33:10
  to pursue. But, you know, when you come to that listing ceremony, and you're ringing the bell
• 33:17
  right there at 42nd and Broadway at the crossroads of the world, as they call it.
• 33:28
  They have this inspirational video that they show right before the bell ringing ceremony.
• 33:34
  And then there's like this confetti that comes at the time and it's really pretty fun.
• 33:38
  But that inspirational video, you know, you see people, you know, they're training,
• 33:43
  they're running you know they're they're they're lifting you see somebody who's showing up early to
• 33:50
  the to the store and flipping the sign says open for business and you see someone you know hard
• 33:56
  nights working and making all the sacrifices that any business owner is accustomed to making in
• 34:03
  terms of the amount of intensity the focus in order to grow the business the discipline in
• 34:08
  order to grow the business. And just thinking about rewarding those traits for companies that
• 34:18
  are now really seeking, as Jonathan put it, to, you know, to climb a taller ladder and that ladder
• 34:26
  made possible by Bitcoin. I think that's a really, it's a really exciting frame. I personally am
• 34:32
  And I'm very interested to see what we receive as a result of this podcast in terms of the
• 34:42
  very interesting businesses that are looking to pivot toward Bitcoin or private businesses
• 34:49
  that already have Bitcoin on their balance sheet and they've reached a certain size and
• 34:53
  they're really ready to go to the next level.
• 34:54
  I mean, that's great too.
• 34:55
  It doesn't have to be brand new.
• 34:57
  I've never worked with Bitcoin before.
• 34:59
  It could also be somebody that, you know, already has Bitcoin on the balance sheet.
• 35:04
  And I just think, I think I expect that we're going to be really inspired by what comes our way.
• 35:11
  And it's not just, you know, adding digital capital or being, you know, trying to plug into Bitcoin.
• 35:17
  One more point that I don't think that we should gloss over because it's extremely powerful.
• 35:26
  and just to juxtapose this the room you are in before you go into the studio you go in you look
• 35:35
  at all the businesses that have um gone on to ring the bell and they show great businesses uh apple
• 35:43
  um i think nokia there was um other robotics companies and like they have their individual
• 35:52
  individual uh my product that they've created like in a showcase around and when i was in there
• 35:59
  i was i was thinking like yeah these this is really interesting you know uh these are great
• 36:04
  businesses but there's no connection between those businesses and what we see in our portfolio
• 36:12
  is real portfolio network effects the companies that are building in bitcoin because bitcoin is an
• 36:19
  open system, any business who is building on Bitcoin, whether it's directly or indirectly,
• 36:26
  is having an overall benefit, raising the tide of every business that's operating. And so any
• 36:33
  business who plugs into Bitcoin is going to benefit every other business around. So whether
• 36:39
  it's Strike or Fold, Unchained, Upstream Data, Giga Energy, Satoshi Energy, these are great
• 36:48
  businesses that we are interacting within the Bitcoin space, but they're also interacting with
• 36:53
  other businesses around. And so any new business coming in will benefit from the network effects
• 36:59
  and be immediately plugged into the 1031 portfolio. Yeah. I mean, I think I'd like to
• 37:06
  comment on this one because, you know, I mean, when we first we first started working together,
• 37:12
  actually as Battery, our investment platform that is adding Bitcoin as an additional collateral
• 37:21
  element to long-term financings and improving financing terms for borrowers, for commercial
• 37:27
  real estate, for project finance, many different kinds of financing structures.
• 37:32
  And 1031 invested in that company and has been a wonderful partner to us And since then of course we expanded our activities together and now are also partners on this BTC development company
• 37:47
  But firsthand here, you know, I have experienced, I think it's going to be, if there are any
• 37:54
  students from Harvard that are listening, I think that this is the perfect Harvard Business
• 38:01
  school case study for them to write about. It would be a really wonderful thing to profile
• 38:09
  what 1031 has done with what you call the network effect, bringing your portfolio companies together.
• 38:16
  Right now it's about 40 on a regular basis and saying, how can you collaborate with one another
• 38:24
  and cross-pollinate and create new ideas and brainstorm and share one another's tools and
• 38:29
  and, and, and, uh, Bitcoin services. And it's more than just encouraging that because what you said
• 38:36
  is actually, it's really, uh, the magic of Bitcoin, which is that Bitcoin is a common equity
• 38:43
  that all of these companies share. If you were running, you were running, you know, I don't know,
• 38:49
  a healthcare fund and you invested in a series of innovative platforms that were looking at
• 38:55
  developing new pharmaceutical treatments or new therapies, and you brought them all together for,
• 39:02
  you know, an annual meeting, to a certain extent, they might benefit from, you know, learning what
• 39:08
  the others are working on, and maybe they would form friendships or what have you. But it wouldn't
• 39:13
  really be the case that if one of them succeeds, the other one's experimental drug is buoyed.
• 39:19
  there's no shared equity. But the model that 1031 has developed, which is Bitcoin only,
• 39:28
  focused on the best builders in the space, focused on companies that are leaning into Bitcoin,
• 39:33
  creates this really strong incentive system that's very, very powerful. And the idea now
• 39:38
  with BTC Development Co. is, you know, again, it doesn't have to be a Bitcoin business that's,
• 39:45
  you know, building a wallet or doing mining. I mean, it could be many different kinds of business.
• 39:51
  It could be a consumer products business. It could be, you know, it could be a retail business.
• 39:59
  It could be a media business. It could be, you know, really any different kind. We can brainstorm
• 40:04
  a few in the next few minutes. Adding Bitcoin to the balance sheet and then having the opportunity
• 40:10
  to work with all of the leading Bitcoin companies in the ecosystem and just have this turnkey
• 40:18
  entree into the market. And we've seen a break out of our portfolio to, I mean, just, I believe
• 40:25
  it was last week or the week before, Strike announced the partnership with BitKey owned by
• 40:29
  Block, which many would perceive as a competitor. But they now have a partnership where people can
• 40:34
  automatically sweep the Bitcoin they buy on strike to a BitKey hardware wallet. Similarly,
• 40:40
  CashApp, BitKey too, they use mempool.space for blockchain analytics. If you're receiving or
• 40:46
  sending a transaction and you want to see where it is outside of BitKey or CashApp's walls,
• 40:52
  you go to mempool.space, which is a 1031 portfolio company. These are little attributes
• 40:57
  that benefit both companies at the end of the day. It's a positive sign game at the end.
• 41:04
  I mean, the more work that's put in, that everyone puts in, everyone benefits from.
• 41:10
  It's like as if everything that I do, you do, Andrew does, invites the fact that we're all going to win because of it.
• 41:21
  Coopetition, as Janice and Lopp like to say.
• 41:23
  I think that was a great phrase that he popularized, at least in the Bitcoin context, a few years ago.
• 41:30
  And so I think that's the pitch.
• 41:33
  We're looking to really find a company that's looking to take it to the next level, partner with experts in the space that have an incredible network that can really help accelerate your transition to digital capital.
• 41:46
  It's growing on me.
• 41:47
  It's growing on me.
• 41:48
  Yeah.
• 41:48
  $250 million enterprise value, $500 million enterprise value or more.
• 41:54
  You know, the SPAC that we've created is a really interesting tool because although SPAC is an acronym that stands for Special Purpose Acquisition Corporation, as a matter of fact, really, these are mergers.
• 42:11
  And what we're seeking is to merge the capital that we have raised, ideally as much of it as possible into Bitcoin, but some of it could be used for other working capital needs, to merge that private company into the SPAC.
• 42:32
  And then the combined company trades under a new symbol on the public markets, benefits from listing on the NASDAQ, which is one of the most liquid stock exchanges in the world.
• 42:47
  And, you know, we're not seeking to acquire the business and, you know, replace the management.
• 42:56
  I mean, absolutely the contrary.
• 42:58
  In fact, what we're seeking to do is to make a strong minority investment in the business, support management teams that have proven track records of success, that want to catapult their business, vault their business into this digital capital future, into this Bitcoin future, that see the real tangible benefits of working with the team that we all are a part of in terms of the Bitcoin connectivity.
• 43:28
  And I think it's probably also worth mentioning, it's more than worth mentioning, it's a really prime factor, is that there is another set of partners on our team, which is the Cohen family and Cohen Circle and Betsy Cohen, Daniel Cohen, Amanda Abrams, Jeff Blumstrom, Brace Young, this whole group that I've been working with now in different capacities for going on 25 years.
• 43:55
  they have just an exceptional track record of building extremely successful and innovative
• 44:05
  publicly traded companies in financial services, in energy, in real estate, banking. I mean,
• 44:14
  Betsy, you know, began Jefferson Bank in the mid-1970s and, you know, sold that to Hudson
• 44:24
  United some years on in the late 1990s, Daniel and Betsy began the Bancor, which was the nation's,
• 44:33
  among the nation's first purely digital banks. And that was in the, I mean, I think in 2000,
• 44:39
  that was started. And, you know, you can just see a pattern of really being ahead of their time.
• 44:46
  And most recently, over the course of the last decade, they've completed countless SPACs.
• 44:52
  And I had served as a director on the board of one of those SPACs, which ultimately was the first engagement with the Bitcoin theme for the Coens, which was the acquisition of Fold.
• 45:08
  and Fold, of course, is a company that was, is, was, and is part of the 1031 portfolio.
• 45:15
  And I had come to know Will Reeves, the CEO, and, and, and develop a real appreciation for his
• 45:24
  vision for the company and for what he has built at Fold. And Jonathan, of course, is very involved
• 45:29
  in the management there. And, you know, we merged with Fold and now Fold is publicly traded and
• 45:36
  enjoying the benefits of that public liquidity. And after the success of that initial transaction,
• 45:43
  I came together as a group and organized BTC Development Co. And just priced it, I think,
• 45:50
  maybe three weeks ago at this point. So we're very much in the top of the funnel process. We're
• 45:58
  looking to build a roster of companies that meet these general characteristics that are already
• 46:08
  seeing a lot of success in their core market, where the ownership would be able to perhaps
• 46:17
  recognize some liquidity by becoming publicly traded, would benefit from bringing strategic
• 46:23
  investors into the company, would benefit from the capital raising possibilities of having a public
• 46:29
  listing, and already has two years of audits. That's a very important factor, and really perceives
• 46:39
  the value of putting a significant amount of Bitcoin on the balance sheet and engaging with
• 46:46
  the Bitcoin community. So I think it's a very nice team that we've brought together here,
• 46:53
  And yeah, I'm just I'm extremely interested to see what comes our way.
• 46:59
  Of course, we're actively looking, but we thought that, you know, we I mean, we thought that it made sense because of the spirit of the Bitcoin community where so much of it happens on podcasts.
• 47:12
  We wanted to reach out to the number one podcast in the space, TFTC, and say, look, this is this is an interesting opportunity.
• 47:21
  If there are listeners who are out there who maybe have been putting Bitcoin on their own personal savings and investing plan for years, but they have a business in, you know, in the commercial window space, or they have a business in manufacturing, or they have a business that's consumer facing, they have, you know, a nice retail footprint, and they want to somehow position that into Bitcoin.
• 47:50
  or they have a fashion business that's been growing rapidly and they want to embrace Bitcoin
• 47:56
  as a trend within the products that they're making and add Bitcoin to the balance sheet,
• 48:01
  whatever the business is, a media business, a portfolio of radio stations, digital media,
• 48:07
  whatever the case may be, those listeners who have been saying, I'm not really a Bitcoin miner,
• 48:15
  that's not how I'm going to get in the space, I'm not going to spin up a wallet,
• 48:20
  or some of the other more what you might think of as conventional Bitcoin business plans,
• 48:27
  but you have a very successful business in its own right,
• 48:30
  and you feel like that business could be powered up with Bitcoin.
• 48:36
  That's really...
• 48:38
  I just can't wait to see what comes out of this.
• 48:42
  Neither can I, gentlemen.
• 48:43
  Jonathan, any closing thoughts?
• 48:46
  One with you?
• 48:46
  just to you know further build on you know what andrew was mentioning there at the end i mean it
• 48:55
  could be businesses in the oil and gas orphan like cat like large portfolios of calfed orphan wells i
• 49:02
  mean we have businesses that can monetize at the well side um there's also businesses that you know
• 49:10
  our stream where you can put Bitcoin mining along the energy stream. So there's a lot of ways to be
• 49:18
  able to plug in to Bitcoin or to companies within the Bitcoin space to elevate your business.
• 49:26
  We're really excited. We are very happy to have partnered again with the Cohen family,
• 49:33
  I partner with Andrew again, and I'm excited for what the future holds.
• 49:40
  I'm bullish on humanity.
• 49:43
  I'm bullish on our endeavors.
• 49:45
  Jonathan, if someone listened to this podcast and they want to reach out to us, how should
• 49:49
  they do that?
• 49:51
  You should reach out at SPAC at 1031.xyz.
• 49:57
  Awesome.
• 49:57
  And we say it a lot here at TFTC at 1031.
• 50:03
  We're going to win.
• 50:04
  So come join some winners.
• 50:05
  We're going to win.
• 50:07
  Gentlemen.
• 50:07
  Thank you.
• 50:08
  This has been a pleasure.
• 50:09
  Thank you, Marty.