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Book coming mid-2025. Some excerpts:

The 24 Risks of Equities "When you're holding a stock, you're holding a share of equity in a company. In essence, you're owning a corporation as property. If your goal is to own that as a store of value over a long period of time, then of course, that is competitive to bitcoin, financially speaking. Some people own companies for other purposes. It's instructive for an investor, that's thinking about whether they want to allocate to bitcoin or equities, to consider the difference. The place you have to start is if you are a company, you're an economic creature. And everything in the world wants to kill you. If you want to understand the risks that corporations face, start by reading the 10Ks of publicly traded companies—they will write pages and pages of risk factors. This is the answer to the investor's question: if I invest a dollar in this company, what could go wrong? I've been a public company officer since 1998 (MicroStrategy’s IPO). So I've been studying public company prospectuses and general business risk probably [since 1996]. If I were to catalog them into a variety of classifications, I would start here: 1. Governance Risk You're risking your money based upon proper corporate governance exercised by the board of directors and the management team. Corporations rely upon human beings and human action is ultimately the source of most of the liabilities and companies. The most successful equities are the ones that manage to execute on a business strategy with the least amount of human behavior. The more people involved and the more decisions need to be made, the more risky it is. 2. Operational Risk Every business has to do something, whether it's serve food, ship products from A to B, fly airplanes, or run a factory. The fact that it does something is operational. If you don't operate the aircraft, the restaurant, or the steel refinery properly, then the shareholders suffer. And in the event of strange volatilities in the environment, the operation gets harder. 3. Strategic Risk In my career, every single one of my competitors went out of business because it did a string of dilutive acquisitions, which were ill-advised. They were a weak company and they bought other weak and dying companies in an effort to stave off their own corporate demise. And they just accelerated their demise while undermining their product. 4. Financial Risk A company has a lot of money moving around that has to be put in banks. At MicroStrategy, we had money in a Brazilian bank. The CEO embezzled the bank and we lost the money. We had money in an Argentine bank. The Argentine government froze all the assets, devalued them, and we lost the money. There's credit risk. There's counterparty risk. There's banking risk. And if you trust the wrong financial counterparty, they'll bankrupt you. 5. Competitive Risk Let’s say I'm the best in the world at something and then somebody else produces a product that's better or cheaper than mine—I'm a restaurant and someone [opens] a better restaurant or I manufacture steel and someone [does it] cheaper. They wipe me out. You cannot avoid competitive risk over the long term. 6. Technology Risk Over time, new types of technology [emerge]. Henry Ford came along with the car, and nobody wanted horse buggies anymore. The world is full of examples of companies that got wiped out by a better technology (e.g. Xerox, Kodak, etc.). But the world is also full of companies that got wiped out because they saw the new technology coming so they made a [bad] acquisition or invested obscene amounts of money to compete. 7. Political Risk Political risk can start at the neighborhood zoning board or even with the mayor of your town. They decide they don't want your kind of business within city limits and so they zone it out. Political risk works because a corporation has a nexus and it has legal standing. Your country can take action against you. A foreign country can even take action against you, banning you from their citizens. You never know where political risk will come from. 8. Facilities Risk If you have a factory, a restaurant, or a ship, then you have a risk to it. And the risk is you have to cross into some geopolitical jurisdiction where it may be either regulated or illegal to do something. 9. Regulatory Risk Regulators can create rules for what you do, and they can change the rules. The problem is there are millions of pages of regulations. So it's hard to comply with them, and it's even harder to know if you're complying with them. 10. Employee Risk When you're a shareholder of a company with a million employees, you could say “This is great, I have a million employees working for me.” But if you thought about it, you’d realize “I have a million employees, and I am legally liable, civilly liable, or criminally liable for everything and anything any of them might do at any time.” More employees = more risk. 11. Vendor Risk I run a bitcoin mining rig and my electricity provider doubles the cost of electricity. I run a restaurant and my supplier doubles the cost of potatoes. I manufacture tires and my rubber vendor cuts me off. 12. Customer Risk Your customers stop buying your products. Whatever you thought was a good business, they [just] don’t want it anymore. The other part of customer risk is if your customer gets too powerful. Maybe one company becomes half of all of my business, so they start to squeeze me by ratcheting down the price. The other problem is if Amazon is my customer and they look at what I'm selling and decide to white-label it. Maybe the government is your customer and so the company has to support the politicians who then support the company. [Or] it's a hostile government that strips you of your patents and passes a law saying you have to sell to them at cost. 13. Reputational Risk You have a brilliant CEO, but it turns out that in college they wrote a [pro-marijuana] thesis. And today the CEO is running a factory in a state where the governor doesn't like [marijuana]. So the CEO becomes a target. As long as there are people that govern the company, those people will have a history. The reputation of the company can be impaired through some activity. It’s unavoidable. 14. War Risk We know the story of DuPont Corporation who sells explosives during a war and they get big. But what about all the companies that sell recreational cruises in the Atlantic during World War I? It didn't help them. War can destroy your business with no sympathy. Every business that got economically wiped out in a war is just collateral damage. 15. Currency Risk Currency is the lifeblood of the corporation. You can't do business without trading in the currency. It's the medium of exchange. Whatever the native currency in the market where you operate, it’s a drain on the equity of the shareholders. The conventional wisdom is if the currency is losing 7% of its value a year, you have to grow your revenues or cash flows by 10% for the equity to hold any value. But almost no businesses can be grown at 10% a year. This causes corporations to do irrational things. One [way] is to lever up by borrowing [lots] of money and buying your stock back. You accumulate debt, you don't accumulate assets or equity. You de-capitalize the company. Then the other [route] is to grow the top line by buying another company. You pursue a strategy of acquisitions (Strategic Risk). Currency risk is driving all this other pernicious behavior. 16. Tax Risk If you do business, you've got the risk of being taxed by a city, state, or country. The taxes can vary, but if someone decides they don't like whatever you're selling, they put a windfall profits tax on you, or a withholding tax on you, or a value-added tax on you. They just tax you out of existence. It's very difficult to deal with and it’s [constantly changing]. 17. Weather Risk Weather is a huge driver of business and there's no way to control it. Many don't even realize they're affected by it. You own an open-air amphitheater. When the weather is bad, people don't go out. If you're lucky, it's just routine cyclical weather. If you're unlucky, it's a tsunami that wipes out your entire [venue]. 18. Customs Risk There’s all [these] cross-border trading taxes that are in place. You've got the North American Free Trade Agreement (NAFTA), which wipes out half the businesses to the benefit of the other half the businesses. So customs and duties are being used as a weapon of political and economic policy. The challenge there is your competitor may decide to influence a politician to create a customs rule that wipes you out. The problem is I can take a million dollars and use it to influence a politician to create a billion-dollar penalty for my competitor. It's unethical and unfair, but it's also uneconomic because someone destroys one billion dollars of value with one million dollars. 19. Legal Risk Every company, because it acts, takes on legal risk. Maybe it produces a non-compliant product. Maybe the people in the factory do something which is non-compliant. You take on liability because of the behavior of your employees. It's never a defense for the company to say “Well, that person just worked for us.” The employee has the power to bind the company contractually. 20. Tort Risk If you manufacture a car and it explodes after it is rear-ended, you get sued. Any kind of product failure or failure to work as expected, you get sued. Tort risk is when you're doing anything that someone doesn't like, so they just sue you. [Maybe] you took a risk [shareholders] didn't want you to take. [Maybe] you took a risk, but you disclosed it in the wrong way. The reason that 10Ks have so many pages of potential risks is that the attorneys are attempting to disclose every possible risk factor and any possible way that the shareholders might lose money because they anticipate someone's going to sue the company in 5 to 10 years. 21. Patent Risk Everybody tries to patent everything. Everybody thinks they invented everything. Patents are just this idea that I can invent stuff and then prevent you from using it. The danger is the trolls, the parasitic lawyers. They don't produce anything and the reason they don't produce anything is if they produce anything, they could be counter-sued. So they just have portfolios of patents, and they just go about suing everybody for everything, everywhere. They will pay the politicians to pass laws to protect the tort lobby. 22. Health Risk Companies are operated by human beings. Is it a problem if the CEO is 45? What about 55? What about 65, 75, or 85? As you age, you have health problems. You become fragile and don't learn as well. You get distracted by your own mortality: if you're lying in the hospital after your second heart attack, it's more difficult for you to take a long-term view of your corporation. 23. Lifecycle Risk When you're 25 and single, you have a different view of the world. When you're 85 and going through your fourth divorce, and you have children and grandchildren who are fighting over half a company you own, you have dynastic power struggles. You actually have all these corporate governance issues and risks to equity holders. 24. Dilution Risk The way companies deal with failure to manage one of the first 23 risks is to issue more stock. If you're issuing a stock creatively and you're acquiring assets that are more valuable than the stock you're issuing, that's a good reason to do it. But if you're issuing stock and you're acquiring fewer assets, or you're simply paying off a liability, then you're diluting shareholders. And over time, you get diluted either by issuance of equity or by absorbing an off-balance sheet liability that catastrophically blows up at some point in the future. At that point, the equity is worth much less, or it’s worth nothing. Conclusion Those are the 24 key risks that every company equity holder has to accept. And every director and every CEO of a company has to think about every one of those risks every minute of every day. There's the famous Antoine de Saint-Exupery quote: 'A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away.' If I take a company and a product, I take away the product, I take away the board of directors, I take away the CEO, I take away the facility, I take away the Nexus, I take away the brand, I take away the employees, I take away all the trading, I take away all the motion, I take away the competitors, I take away all the new ideas, I take away all of the uncertainty and the volatility. I take away the human factors and the lifecycle. I take away the life and the death I take away the life and the death and the aging. I take away the drama. What have I got left? Bitcoin is a company where I've stripped away the 24 different risks."