How to Run a Public Bitcoin Treasury Company

Introduction to Bitcoin Treasuries Spaces

Launch of the Inaugural Session

• Will and Pete confirm audio connection, with Pete expressing excitement about the inaugural Bitcoin Treasuries spaces.

• Pete invites participants to explore Bitcoin Treasuries for information and announces new product launches.

New Product Announcements

• A newsletter is introduced, featuring top Bitcoin Treasury buys on Mondays and deep-dive analyses on Fridays.

• A business directory is launched on the website, aimed at connecting businesses servicing Bitcoin treasury companies.

Transitioning to a Public Company

Discussion with Will from Fold

• Will expresses enthusiasm about participating in the first session and reflects on launching new products.

• The conversation shifts to Will's experience transitioning Fold into a public company, highlighting his long-term use of Fold since 2020.

Journey of Becoming Public

• Will shares that Fold started in 2019 but has roots dating back to 2015 or 2016; becoming public was not initially part of their vision.

• He notes that they are six months into being publicly listed and have gained confidence in navigating this new phase.

Understanding Bitcoin as a Treasury Asset

Evolving Perspectives on Holding Bitcoin

• The discussion focuses on how companies perceive holding Bitcoin as an asset, especially regarding shareholder value.

• Will reflects on how their approach to growing their Bitcoin balance has evolved from humble beginnings aligned with customer beliefs.

Transformative Nature of Holding Bitcoin

• He emphasizes that holding Bitcoin has proven more valuable than all funds raised during their private phase.

• The contrast between fiat-based companies' financial structures versus those accumulating value through Bitcoin is highlighted.

Confidence from Holding a Treasury

• Will explains that having a substantial Bitcoin treasury provides stability and confidence when entering public markets.

• He concludes by stating that this strategy empowers both small businesses and public companies alike.

Bitcoin Treasury Companies and Fold's Strategy

Insights on Bitcoin Treasuries

• The speaker discusses the current state of Bitcoin treasuries, highlighting a significant amount of Bitcoin held by companies and the analytical approaches being used to evaluate these assets.

• A question is raised about whether Fold qualifies as a Bitcoin treasury company, emphasizing the distinction between pure play Bitcoin companies and those that integrate Bitcoin into their operations.

Fold's Position in the Market

• The speaker confirms that Fold operates as a Bitcoin company that accumulates Bitcoin in its treasury, which supports launching new financial services with improved margins for customers.

• They emphasize the synergy between operating as a business while stacking Bitcoin, suggesting this dual approach enhances profitability and customer value.

Growth Metrics and Financial Health

• Fold reports impressive growth metrics: 50% year-over-year revenue increase, 300% user growth, and all product lines being profitable.

• The speaker notes that unlike other companies affected by market downturns, Fold maintains strong momentum due to its operational model focused on accumulating Bitcoin without dilution.

New Metrics for Valuation

• Discussion shifts to new metrics like MNAV (Market Net Asset Value) and "Bitcoin per share," which are emerging in evaluating companies' performance related to their Bitcoin holdings.

• The speaker expresses skepticism about some valuation methods, particularly MNAV, citing misconceptions regarding how it should be assessed when considering operational businesses alongside treasury assets.

Evaluating Business Viability

• Concerns are raised about distinguishing between growing businesses versus those that may hinder overall value due to poor performance or negative growth.

• The importance of understanding underlying business dynamics is stressed; simplistic views on MNAV can lead to misguided evaluations during hype cycles surrounding cryptocurrencies.

Future Outlook for Investors

• "Bitcoin per share" is highlighted as a valuable metric for assessing company health; however, increasing this metric becomes more challenging with larger holdings.

• Ultimately, the focus should be on sustainable business growth and consistent accumulation of Bitcoin through various market conditions. A call for patience is made as the market matures over time.

Bitcoin Metrics and Company Strategies

Initial Q&A and Bitcoin Per Share Discussion

• The discussion opens with a Q&A format, inviting audience participation. The focus is on the metric of Bitcoin per share, which may favor newer companies as they grow.

• It is suggested that established companies like MicroStrategy find it challenging to increase their Bitcoin per share due to their already substantial holdings, leading them to rely on debt for growth.

Company Metrics and Market Positioning

• Companies announcing small amounts of Bitcoin can easily boost their metrics by acquiring more, while larger firms face limitations in scaling up significantly.

• Different metrics are used by companies to showcase their performance; however, the effectiveness of these metrics varies based on the company's stage and marketing strategies.

• The speaker emphasizes that MicroStrategy has been derisked through consistent accumulation of Bitcoin over time, unlike other companies that have not faced similar market tests.

Conviction in Strategy Amidst Market Challenges

• There is uncertainty about how new entrants into the Bitcoin treasury space will maintain conviction when faced with market skepticism or negative trends.

• Michael Saylor's unwavering commitment during market downturns is highlighted as a reason for MicroStrategy's premium valuation compared to competitors who lack such resilience.

Differentiation in Financial Services

• The conversation shifts towards differentiation strategies among competing companies in the financial services sector related to Bitcoin.

• Fold aims to distinguish itself from pure-play Bitcoin treasuries by creating a financial services platform that facilitates significant transactions within the traditional financial system.

Growth Potential and Capital Access

• Fold benefits from being a public company with access to capital markets, allowing it to accumulate Bitcoin without dilution while tapping into growing demand for financial tools linked to Bitcoin.

• As more users engage with Bitcoin as an appreciating asset, Fold positions itself strategically within this expanding network, enhancing its revenue potential through transaction facilitation.

Bitcoin Accumulation Strategies and Market Dynamics

Focus on Bitcoin Accumulation

• The Fold team is dedicated to creating a Bitcoin accumulation engine aimed at long-term growth, emphasizing daily accumulation without dilution.

• There is a belief that this strategy could allow them to outperform Bitcoin in the mid to long term.

Discussion on MicroStrategy's Strategy

• Will Reeves from Fold discusses MicroStrategy's position, noting their significant presence just outside the top 30 in Bitcoin treasury holdings.

• The conversation explores whether MicroStrategy's strategies can be replicated by other companies or if they are unique due to their established market position.

Innovation and Market Access

• The analogy of oil refineries is used to describe how MicroStrategy innovates by creating products for various capital allocators, moving beyond simple transactions.

• They have successfully tapped into both retail and institutional markets, developing specialized products that cater to specific investor needs.

Barriers for New Entrants

• Despite the influx of new Bitcoin treasury companies, not all have access to the same financial tools as MicroStrategy; public companies face limitations based on liquidity and market connections.

• New entrants often lack basic tools like ATMs until they are seasoned for 12 months, which hinders their ability to replicate successful strategies.

Competitive Edge of MicroStrategy

• Michael Saylor’s innovative approach places him ahead of competitors; he understands both structural advantages and execution challenges that others may not overcome easily.

• Saylor’s transparency about his operations makes it difficult for others to catch up, reinforcing his competitive advantage in the market.

Historical Context and Future Outlook

• Comparisons are drawn between Saylor’s innovations and historical figures like Elon Musk, highlighting how leading firms benefit from open sourcing while maintaining a competitive edge.

• Bloomberg data indicates that several top IPOs this year were related to MicroStrategy initiatives, showcasing their influence in the market.

Audience Engagement

• A question arises regarding future features within the Fold app, specifically about implementing lightning deposits and withdrawals compared to traditional on-chain methods.

Discussion on Lightning Network and Bitcoin Treasury

Innovations in the Lightning Network

• The speaker highlights Fold's early innovation in the Lightning Network, mentioning a project called "lightning pizza" that allowed users to order Domino's pizza using this technology.

• Currently, Fold enables purchases through the Lightning Network, although lightning deposits are not yet prioritized on their roadmap.

Future Developments and Team Expansion

• The speaker notes that over the past eight months, they have assembled a talented team from leading fintech and Bitcoin companies to enhance their capabilities in utilizing the Lightning Network.

• Legislative developments regarding Bitcoin transactions may prompt Fold to accelerate its plans for integrating lightning deposits into their services.

Market Analysis and Investor Insights

• Eddie, a retail analyst, questions how quarter-over-quarter fluctuations in Bitcoin prices affect earnings reports and investor perceptions of value.

• The speaker acknowledges that early precedents set by companies with large Bitcoin treasuries created distortions in financial reporting due to capital requirements from miners.

Transparency in Financial Reporting

• Fold aims for transparency by providing adjusted EBITDA figures that clarify business performance without being obscured by Bitcoin price volatility.

• Eddie emphasizes that traditional analysts might misinterpret treasury values based on short-term price changes rather than long-term growth potential.

Engagement with Investors

• The discussion shifts towards how Fold engages with its consumer base now as a public company, highlighting the importance of effective communication about their financial health.

• The conversation concludes with an acknowledgment of technical issues during the session but reiterates interest in discussing quarterly earnings further.

Bitcoin's Volatility: Opportunity or Risk?

Understanding Bitcoin's Unique Market Dynamics

• The traditional view of stocks is typically "up only," where any downturn signals a red flag. In contrast, Bitcoin treasury companies see volatility as an opportunity for growth.

• Companies often have exposure to various asset classes, but Bitcoin's volatility is unmatched, leading to significant fluctuations in earnings based on market conditions.

• Massive drawdowns or spikes can occur within short timeframes, affecting quarterly results and causing concern among algorithms and uninformed traders.

• Earnings reports may reflect a single snapshot in time, which can misrepresent the long-term value of Bitcoin holdings for informed investors.

• Miners historically avoided breaking out their Bitcoin metrics due to favorable market conditions masking operational issues; however, understanding this volatility strategically is crucial for future success.

Strategic Perspectives on Bitcoin Holdings

• Investors are increasingly recognizing the strategic use of Bitcoin's volatility; some focus on short-term trading while others maintain a long-term perspective.

• A recent discussion highlighted contrasting views between quarter-by-quarter traders and long-term holders, emphasizing opportunities for both strategies as public companies accumulate substantial Bitcoin assets.

Market Mechanics and Investor Awareness

• Recent announcements from firms like Pro Cap illustrate attempts to align share values with daily Bitcoin prices amidst Wall Street reporting requirements.

• Many SPACs (Special Purpose Acquisition Companies) are still pending their de-SPAC process; investors must consider how outstanding shares will change post-de-SPAC when evaluating company value based on Bitcoin holdings.

• There exists significant arbitrage potential in the current market dynamics; however, many retail investors lack full awareness of these complexities and their implications.

Future Outlook and Community Engagement

• As more SPAC plays enter the market over the next six months, there will be excitement followed by necessary adjustments as realities set in regarding company valuations beyond just Bitcoin holdings.

• Conversations about these advanced topics are essential for community understanding; engagement through platforms like Twitter Spaces can help disseminate knowledge effectively.

Audience Interaction

• An audience member asked about Fold’s presence at an upcoming conference. The response indicated that while key personnel would attend, other commitments would prevent direct participation from leadership.

Credit Card Rollout and Company Insights

Introduction to the Credit Card Rollout

• The speaker acknowledges a request to connect with Haley and discusses the rollout of a credit card, questioning whether app users will be prioritized or if it will follow a waitlist system.

Challenges Faced in Implementation

• A critical partner was acquired by a larger company, leading to the shutdown of their offering. This required the team to pivot at a crucial moment in the rollout process.

Future Developments and User Access

• The plan is to incorporate both waitlist participants and long-term users for priority access, respecting those who have been waiting for Bitcoin.

Product Sneak Peeks and Public Company Limitations

• With earnings approaching, there are limitations on what can be disclosed about upcoming products. The speaker reflects on how being public restricts open communication compared to when they were private.

Advice on Going Public

Personal Connection and Inquiry

• John introduces himself while expressing his interest in going public with his company, seeking advice from an experienced friend within the Bitcoin community.

Future of Bitcoin Treasury Companies

• The speaker expresses excitement about companies that stack Bitcoin as part of their treasury strategy, indicating an expected rise in such businesses that operate effectively within capital markets.

Examples of Successful Companies

• Figma is cited as an example of a company holding significant Bitcoin without marketing it as an asset. This indicates a growing trend among companies recognizing Bitcoin's value as a store of wealth.

Considerations for Going Public

Investment Requirements

• Going public requires substantial investment across various fronts including time, focus, ownership stakes, and financial costs.

Different Paths to Going Public

• Various methods exist for going public (reverse mergers, SPACs, traditional IPO), each with unique benefits and drawbacks that need careful consideration based on individual circumstances.

Market Timing Considerations

• Emphasizes the importance of timing when entering public markets due to cyclical nature; suggests reverse mergers may offer more flexibility but come with trade-offs.

Focus on Operational Health

Maintaining Business Stability

• John emphasizes maintaining operational health while exploring revenue opportunities without straining resources or balance sheets.

Sustainability in Bitcoin Operations

Balancing Sustainability and Growth

• The discussion highlights the challenge of balancing sustainability within operating companies while pursuing aggressive growth strategies in the Bitcoin space.

• Mention of David's ambition to build a "Bitcoin halfway" and Simon's equity announcements indicates a trend among leading players recognizing the need for operational foundations.

• Reference to MicroStrategy’s initial success with substantial cash flows emphasizes that sustainable operations are crucial for long-term Bitcoin strategies.

Pathways to Sustainable Business Models

• Companies like Fold and Semler are seen as having more sustainable pathways due to their diversified services, which reduce correlation with Bitcoin market fluctuations.

• The importance of an operational company is reiterated, suggesting that many firms may be skipping essential steps by not establishing solid operational foundations.

Execution Risks and Market Dynamics

• Concerns are raised about companies lacking operational angles facing challenges during downturns or increased competition for capital.

• The conversation points out that it is easier to acquire Bitcoin than to run a successful operating company, highlighting execution risks for those pivoting into operations.

Future Outlook on Company Performance

• Acknowledgment that over the next 12 to 24 months, differences in company performance will become apparent as they navigate market conditions.

• Emphasis on ensuring healthy operating companies as a foundational step; many current tickers overlook this critical aspect.

Innovative Financial Strategies

• Discussion shifts towards innovative financial mechanisms such as dividends paired with stock buybacks, potentially creating a non-inflationary model akin to Bitcoin's value proposition.

• The idea of transparent schedules for buybacks linked with dividends could attract investors by intertwining various financial strategies effectively.

Exploring the Future of Bitcoin and Company Dynamics

The Evolution of Financial Instruments

• Discussion on how financial instruments have evolved from traditional forms to credit cards, highlighting the potential for small dividends to unlock greater opportunities in the market.

• Emphasis on the interconnectedness of various financial mechanisms, suggesting that multiple "flywheels" can work together rather than existing in isolation.

Market Dynamics and Share Optimization

• Insight into market dynamics, particularly regarding MNAV (Market Net Asset Value) compression and its implications for Bitcoin share value through buybacks.

• Counterintuitive strategies are discussed where selling Bitcoin may be necessary to optimize shares, challenging typical Bitcoiner instincts to reinvest all capital into Bitcoin.

Leadership Under Pressure

• Speculation on how leadership will respond during market downturns and increased competition, especially with companies like Figma integrating Bitcoin into their treasury strategies.

• Acknowledgment that many developments in this space are yet to unfold, indicating a period of early exploration within the cryptocurrency landscape.

Community Engagement and Future Discussions

• Appreciation expressed for educational efforts within the community; mention of upcoming discussions featuring industry experts like Pierre Rashard focusing on innovations in Bitcoin Treasury management.