How the Phone Companies Are Becoming Banks

In the video below, Michael Saylor, CEO and founder of MicroStrategy (NASDAQ: MSTR  ) and author of The Mobile Wave, visits The Motley Fool to discuss tech, business, and social trends as they relate to investors today.

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Michael Saylor: Telephone companies; take them, for example. You think you sell point-to-point voice, and SMS comes along. You don't follow, you're in trouble. Now you do SMS, you can actually put a concert ticket or a piece of cash on that device. If you don't do that, you're in trouble.

The most intelligent telephone companies are about to become banks, and it's not clear to me how the banks stop them.

On the other hand, I met with a bunch of banks over the past two weeks. One bank I met with, I said, "Look, you can use mobile technology to make your bank 20 times as easy to do business with, and 20 times as secure."

They looked at it, and they said, "This is so compelling we're going to start the project."

I said, "When?"

They said, "This month."

I said, "Really?"

They said, "We'll start it on a holiday or a weekend if you want."

I met with another banker; actually a person that was much richer, a person with a lot of money, from a rich family. I said the same thing.

They looked at the person that made the introduction, they said, "This is about technology, right? Why did you bring me into this meeting?"

I said, "Look, someone with $100 million is going to move their money out of your bank into another bank in about a month if they think that you're providing inferior service. At the point the technology became interesting to your customer, it should become interesting to you."

People blank out.

I met with one head of a credit card company which will remain nameless. I said, "Look. If you put your credit card on the phone, nobody can steal it, and you can obliterate all the credit card fraud that goes on in your network. You can also make it possible to do a credit card transaction in 30 seconds, instead of three minutes. What do you think?"

He said, "It's a great idea. Who should I talk to in my company to follow up?" Dwell on that thought. CEO says, "Who should I talk to in my company to follow up?"

Pursuant to your question, it's like you get so successful, CEOs do anything other than think about, "What's the product to sell to the customer?"

When your company is going to zero, you stop and you say, "What's important?"

What's important is that customers keep paying the bills. "Oh, I don't have any customers? That's a problem. I'd better find a customer... Oh, well I'd better find a customer, ask them what they want, and then give it to them, and then create that value change," and then everything else becomes irrelevant.

If I generate cash flow, it doesn't matter what the stock market values my stock at. In the words of Warren Buffett, he'd rather see the stock low because he buys it. If it's high, he has to sell it. Over the long term, the market is a weighing machine. Over the short term, it is a voting machine.

I think those are basic principles. If you go back to the first principles, I think you sleep a lot easier at night, and the business is a lot more fun.

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9/30/2016 4:00 PM
MSTR $167.44 Up +1.70 +1.03%
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