Michael Saylor: the MicroStrategy founder’s biography and views

01.09.2022

Intermediate

#Institutional Investors and Whales #Michael Saylor #MicroStrategy

Key points

Michael Saylor is an entrepreneur, the founder and, until 2022, the CEO of the American technology firm MicroStrategy, which develops a business-analytics platform.
In the summer of 2020 MicroStrategy became the first Nasdaq-listed public company to shift part of its capital into bitcoin. By early September 2022 MicroStrategy owned nearly 130,000 BTC.
Saylor initiated this strategy. He argues that bitcoin is a reserve and investment asset that allows businesses to protect their capital against the inflation risks of fiat money.
In early August 2022 Saylor left the CEO role amid record losses caused by bitcoin’s price slump. He remained at the company and plans to focus on its financial strategy.

Early years and the founding of MicroStrategy

Saylor was born in 1965 in Lincoln, Nebraska. He graduated from the Massachusetts Institute of Technology (MIT) in 1987. That year he began working at consulting firm The Federal Group, where he worked on modelling computer simulations. In 1988 he moved to DuPont.

In 1989, together with fellow MIT graduate Sanju Bansal, Saylor founded the IT company MicroStrategy, where he served as chief executive until 2022.

The company’s first major client was McDonald’s, with which it signed a contract in 1992.

In 1998 MicroStrategy successfully completed its initial public offering (IPO).

Soon after, the company founded Alarm.com, a project that offers remote control of devices and monitoring systems. In 2009 the start-up was sold to venture fund ABS Capital Partners.

In 2000 the Washingtonian newspaper valued Saylor’s wealth at $7bn.

That spring the SEC brought charges against Saylor and two other MicroStrategy executives for inaccuracies in the company’s financial reporting over the previous two years. He settled with the commission by paying a fine, without admitting wrongdoing.

Today MicroStrategy’s core product remains a business-analytics platform for corporate clients.

Opposition to lockdown during the coronavirus pandemic

In March 2020, shortly after the United States imposed lockdown in response to the coronavirus pandemic, Michael Saylor sent a letter to nearly 2,000 MicroStrategy employees.

In it he criticised the authorities’ actions, in particular social-distancing requirements and “economic hibernation”. A sweeping quarantine, he said, could lead to severe economic harm.

Why MicroStrategy started buying bitcoin

In August 2020, with a market capitalisation of about $1.3bn, MicroStrategy suddenly announced the purchase of about 21,454 BTC for roughly $250m. It became the first Nasdaq-listed public company to place capital in bitcoin.

“This investment reflects our belief that bitcoin, as the most popular cryptocurrency in the world, is a reliable store of value and an attractive investment asset. Its long-term potential is greater than that of fiat money,” Saylor said of the decision.

MicroStrategy went on to buy more bitcoin. According to Bitcoin Treasuries, as of September 1, 2022 the company held nearly 129,700 BTC worth more than $2.5bn. Saylor continues actively to advocate keeping corporate capital in cryptocurrency.

How Michael Saylor makes the case for bitcoin for businesses and investors

MicroStrategy’s founder explained the purchase of bitcoin by citing high inflation risks in the United States, which could lead to a rapid erosion of dollar-denominated savings.

He later maintained that his company’s bitcoin investment was not mere speculation but a long-term strategy, and he pledged to hold the cryptocurrency for 100 years.

In 2020–2021 financial markets rallied amid large stimulus programmes by Western governments. Some analysts compared investments in bitcoin and other cryptocurrencies with bets on high-risk assets. In Saylor’s view, however, institutional purchases of bitcoin were driven more by the desire to hedge against the risks of devaluation of fiat currencies.

In the autumn of 2020 Saylor said that other firms—chiefly private enterprises—would soon move their savings into bitcoin, and MicroStrategy’s chief financial officer later said that holding the first cryptocurrency is a “duty” of every technology company.

Saylor stresses that bitcoin is not a direct alternative to fiat money but a form of valuable property that one does not part with. He also calls the first cryptocurrency a new reserve asset.

Another reason for businesses to hold bitcoin, in his view, is its long-term investment appeal. Saylor is confident that profits from buying bitcoin will ultimately exceed the returns from early investments in Apple, Amazon, Google, Facebook and other leading technology firms.

How much bitcoin Michael Saylor holds

In October 2020 the MicroStrategy founder disclosed that he owned a substantial amount of bitcoin, acquired before his company invested.

According to Saylor, his personal portfolio at that time held 17,732 BTC, bought at an average of $9,882 per coin. He noted that he had notified MicroStrategy of these holdings before the company executed its first bitcoin purchase. As of September 1, 2022 Saylor’s savings in the first cryptocurrency were worth nearly $353m.

Stepping down as MicroStrategy CEO and a tax-evasion allegation

In early August 2022 Michael Saylor said he was stepping down as CEO of the company he founded. Phong Le took the post. Saylor became executive chairman and focused on financial strategy, in particular further bitcoin acquisitions.

At the same time MicroStrategy published its financial report for the second quarter of 2022, according to which the company incurred more than $1bn in charges on revenue of $122m. The loss was 96.5% larger than in the same period of 2021, mainly due to the fall in the price of bitcoin and other cryptocurrencies.

Saylor called these results temporary and noted that bitcoin had outpaced the stock market. Had it kept its capital in dollars, MicroStrategy, he said, would have been losing about 20% of its purchasing power a year.

Less than a month later the authorities of the District of Columbia, where the US capital Washington is located, accused the entrepreneur of evading taxes of about $25m.

According to the local prosecutor, since 2005 Saylor has lived in one of the district’s cities but “masqueraded” as a resident of states with low tax rates, notably Florida or Virginia. To that end, the accusation says, Saylor bought property in those states and registered there as a voter.

The MicroStrategy founder rejected the accusations:

“Although MicroStrategy is located in Virginia, I live, vote and participate in jury duty in Florida; it is the centre of my personal and family life. I respectfully disagree with the District of Columbia’s position and expect a private resolution of the dispute in the courts,” he said.