Taking a publicly traded company to speculate on Bitcoin and making billions - he is truly the happiest person in the bull market.

As the Bitcoin price once again surpassed its all-time high, MicroStrategy's stock price also soared, with a gain of over 2500% since mid-2020, outperforming Bitcoin's approximately 660% gain during the same period and even surpassing the AI leader NVIDIA.

Last night, MicroStrategy's intraday stock price surged by 15%, reaching a high of $498.89, once again breaking its all-time record. Its market capitalization also exceeded $100 billion for the first time. Currently, MicroStrategy has entered the top 100 in market value among U.S. listed companies, ranking 33rd on the NASDAQ, 89th on the S&P 500 Index, and 85th in the overall U.S. stock market.

As of now, MicroStrategy and its subsidiaries hold about 331,200 bitcoins, with a total cost of about $16.5 billion and an average purchase price of $49,874. According to data from Bitcoin Treasuries, MicroStrategy is the publicly traded company with the most bitcoin holdings globally, far surpassing bitcoin mining companies Marathon and Riot, as well as leading cryptocurrency exchange Coinbase, which are more "crypto-native" in their business focus. Analysis indicates that MicroStrategy still has $15.3 billion in funds available for further bitcoin purchases, and its aggressive accumulation strategy may continue until the end of the year.

Statistics on MicroStrategy's bitcoin purchase dates, prices, stock prices, and market capitalization; Data source: bitcointreasuries, mstr-tracker

Additionally, the company's founder and CEO, Michael Saylor, himself holds over 17,000 bitcoins and owns 14% of the company. If the price of Bitcoin reaches $100,000, Saylor's personal assets will reach $11.1 billion, enough to boost his global billionaire ranking by nearly 200 places, surpassing Peter Thiel.

In his zodiac year, at the age of sixty, Michael Saylor not only went all-in on the company to buy Bitcoin wildly but also leveraged, taking a bold gamble that completely changed his and MicroStrategy's fortunes.

Starting in 2020, Michael Saylor, on behalf of the company, strategically allocated Bitcoin as a corporate reserve. This company, originally focused on business intelligence, data analytics, and cloud computing, underwent a transformation due to its bold Bitcoin investment strategy, becoming the publicly traded company with the most Bitcoin holdings globally.

But such a crazy Bitcoin hodler once said ten years ago, "Bitcoin won't last long, it's just a matter of time, its fate will be the same as online gambling." At that time, he thought that Bitcoin would either be declared illegal and completely banned, or it would be surpassed by other cryptocurrencies, thus fading into history.

So, what exactly happened during these ten years that prompted Michael Saylor, a Bitcoin skeptic, to transform into the most devout believer and advocate we see today?

Playing Games with God: The Early Life of Business Savant Michael Saylor

"My belief is, if you're going to play a game, you might as well go all in, no exceptions, I don't believe in those who hold back and expect to have the last laugh."

Like other founders of internet companies, Saylor also has a nearly legendary life story. His father was a sergeant in the U.S. Air Force, and his mother was the daughter of a country singer.

"My father was the typical, strict military sergeant," Saylor recalled. "If you decide to do something, you must do it the best, do you understand? He was a man of absolute integrity. I have never seen him lie, to anyone or about anything, he never cut corners. It wasn't until I grew up that I realized how unique this quality was. Many people like to take shortcuts, bargain, but my father never did that, he never took shortcuts."

In a color photo, his mother Phyllis is smiling. "My father taught me what character is, and my mother taught me what charm is."

His father told him that some things must be done; his mother told him that he could do anything he wanted because he was smart. In seventh grade, he was named the Paperboy of the Year, and his mother pulled him aside, whispering in his ear, "You will make a great contribution to society when you grow up because you are talented and intelligent—so make good use of these talents."

Saylor was an excellent student and learned to fly gliders in high school, graduating at the top of his class. Later, Saylor received a Reserve Officer Training Corps (ROTC) scholarship and entered the Massachusetts Institute of Technology to study the history of technology and aerospace engineering. However, due to a heart murmur found during a medical examination, Saylor had to give up his dream of becoming a pilot or astronaut.

The Rollercoaster Ride of Entrepreneurship

After spending some time as a computer simulation planner at DuPont, a 24-year-old Saylor co-founded MicroStrategy in 1989 with his MIT roommate and fraternity brother, Sanju Bansal.

At that time, Saylor realized the powerful data analytics capabilities of the internet, which could help businesses analyze massive amounts of data about their products and markets. Soon, customers were paying MicroStrategy tens of thousands of dollars annually to create intuitive charts displaying insightful consumption trends, such as which consumers preferred specific beverages or insurance products.

The turning point for the startup truly came with a $10 million contract signed between MicroStrategy and McDonald's, which funded the development of applications to assess the effectiveness of promotional efforts and played a crucial role in MicroStrategy's early growth.

In 1992, 27-year-old Michael Saylor celebrated MicroStrategy's first major client, McDonald's, securing a $10 million contract; Image Source: Instagram @michael_saylor.

By 1998, during the 11-day roadshow leading up to MicroStrategy's IPO, Saylor had already made a remarkable impression. He even invited a Washington Post reporter to document the entire process. Saylor's sales style relied on passion, stagecraft, and grand storytelling rather than numbers, and his extravagant presentations were far more captivating than a typical PowerPoint.

On Wall Street, Saylor was seen as arrogant but undeniably charismatic. News reports from that time showed Saylor's immense enthusiasm for data analytics technology and his compelling vision for its future, leading almost all investors to sign on based on their confidence in him.

There was a software investor on Wall Street who loved to belittle CEOs from the software industry during every meeting, calling them all "trash." However, Saylor, with his silver tongue, managed to get his signature. At Bear Stearns, Saylor took only 20 minutes to persuade the company's CEO to subscribe to 10% of the shares. Fidelity, the world's largest fund company, was considered the toughest defense in the industry, but according to Saylor, breaking into this company was as easy as a slam dunk, effortlessly overcoming all obstacles.

MicroStrategy is also a pioneer in enterprise data analytics technology, which enables retail companies, pharmaceutical giants, banks, insurance companies, and government agencies to uncover key trends from vast amounts of data through data analysis software. With this expertise, MicroStrategy has secured over 300 long-term clients, including heavyweights such as KFC, Pfizer, Disney, Allianz, Roche, and ABC.

After going public in June 1998, MicroStrategy quickly became Wall Street's darling. By March 2000, its stock price had surged to 16 times its IPO price, with a market cap of nearly $18 billion.

However, at this point, MicroStrategy got entangled in an accounting scandal, causing its stock price to plummet by 62% in a single day. Saylor lost $6 billion of personal wealth in a flash, even becoming the answer to a question in the puzzle game "Who lost the most money in one day?"

In March 2000, MicroStrategy's audit firm, PwC, demanded it restate the revenue and profits for the previous two years. After the re-audit, MicroStrategy's performance in 1998 and 1999 shifted from a $28 million profit to a $37 million loss. Saylor, along with another founder and the company's CFO, opted to settle the related charges with the SEC by paying a $11 million fine. As the CEO, Saylor himself forked out $8.3 million, but Saylor and others involved in the scandal denied any wrongdoing.

Saylor graces the front page of the March 21, 2000, Daily News

By mid-2002, MicroStrategy's market cap had plummeted to around $40 million, a 98% drop from its peak.

However, at this juncture, Saylor had another brainwave that led to MicroStrategy's resurgence. He foresaw the explosive growth of mobile devices and believed that developing applications to help clients analyze the vast data collected from users' iPhones and laptops could be a game-changer.

Around 2009, Saylor offered his software for free to Facebook's new Chief Operating Officer, Sheryl Sandberg. MicroStrategy's technology was crucial for Facebook, as it allowed salespeople to know how much revenue each product could generate. Facebook eventually became a stable customer of MicroStrategy, bringing in millions of dollars in revenue annually, and Saylor also achieved sustained profitability through the rise of mobile.

Becoming an Iconic Thought Leader

While his business was not exceptionally large, Saylor's personal life was luxurious. He owned a mansion in Miami Beach with 13 bedrooms and 12 bathrooms. He also had a $47 million Bombardier jet and two yachts. One of the yachts was named "Hal's Yacht" to commemorate the ship that brought his ancestors from Rotterdam, the Netherlands, to Philadelphia in 1736.

Saylor was also a party enthusiast. In 2010, he celebrated his birthday at the W Hotel in Washington DC with a wild animal-themed party, even posing for photos with a Burmese python around his neck. Every year before Thanksgiving, he hosted a rock festival in Manhattan's SoHo, where guests dressed up as rock stars.

During an interview with Fortune, Saylor's former colleagues mentioned that besides his lavish social life, Saylor was eager to have a broad influence in the tech world and aspired to be a renowned thought leader. According to a former employee, it meant "becoming an iconic thought leader admired by all."

However, as per ex-colleagues, Saylor was described as capricious and overly detail-oriented in his management style, with some saying he was "too controlling." Saylor was extremely self-assured, believing he could personally handle anything and, therefore, was reluctant to delegate authority to his subordinates.

Nevertheless, Saylor proved to have a keen eye for observing major trends. In 2012, he published a best-selling book titled The Mobile Wave: How Mobile Intelligence Will Change Everything, foreseeing how mobile devices would revolutionize various sectors from retail to banking.

Within MicroStrategy, Saylor spearheaded at least two notable new ventures. A former colleague of Saylor once commented: "He has a unique foresight for the future."

In the late 2000s, Saylor developed a monitoring platform that allowed households and businesses to monitor their security systems through the website Alarm.com. In 2008, he sold this business for $28 million. In the early 2010s, Saylor developed the first batch of cloud-based Automated Call Distribution (ACD) systems for call centers, naming it Angel. In 2013, Genesys acquired Angel for $110 million.

His former colleague said, "Saylor does not allow people to do things their own way, but without this freedom to act, people cannot grow. Of course, I think the pros outweigh the cons. Just think, if you followed his every investment step, first the Internet, then mobile technology and cloud computing!"

However, Saylor's emotional and unpredictable style has also put significant pressure on the management team, to some extent hindering the company's development. Since 2018, he has gone through 3 marketing directors, and a CFO left after just one year. Saylor cannot retain top talent, which also explains why he did not grow and strengthen excellent ideas like Angel and Alarm.com but sold them to other companies.

Michael Saylor's favorite game to play is Dungeons & Dragons, and he has always insisted on being the dungeon master because he "likes to create and control situations." Just as in his business journey, time and time again, his choices have been proven to be correct, all thanks to Saylor's judgment of the situation.

The entrepreneurial experiences of his early life have already provided Saylor with enough adventure. Saylor is a Christian and has been baptized, but in his view, real-world life is like playing a game with God. "Look at my ring—there's a beaver, right? That beaver is playing a game with God in the waves. Edison also played a game with God. Rockefeller, Carnegie... these people are all like me, just playing a game in this life."

Michael Saylor's second half of life game has begun.

Why Did Saylor Buy Bitcoin and Bring Musk Along for the Ride?

In 2015, MicroStrategy had a revenue of $134 million, but after that, the company's revenue declined year by year. By 2018, revenue had plummeted to $3.981 million, in 2019, a loss of $1 million, and in the first three quarters of 2020, MicroStrategy's revenue suffered a loss of about $14.02 million.

During the pandemic black swan event, Saylor had an epiphany. At that time, MicroStrategy had a large amount of cash on hand, and Saylor was concerned that the Federal Reserve's loose monetary policy would exacerbate inflation, leading to a significant devaluation of his cash.

At the quarterly meeting in July 2020, Saylor announced that MicroStrategy planned to purchase Bitcoin, gold, and other assets to replace the cash still held on its balance sheet.

One month later, MicroStrategy used $250 million in existing cash to purchase 21,454 bitcoins. In September and December 2020, MicroStrategy further spent $175 million and $50 million, respectively, to buy Bitcoin.

In December 2020, to further increase its Bitcoin holdings, MicroStrategy issued $650 million in convertible bonds. These bonds typically have longer maturities, with most due in 2027-2028, and some even being zero-coupon bonds. This allowed the company to maintain lower financing costs over the next few years and, following the bond financing obtained, quickly deploy it to purchase Bitcoin, directly adding it to the company's balance sheet.

Through bond financing, MSTR continuously increased its Bitcoin holdings, which not only increased the amount of Bitcoin on its balance sheet but also provided a significant driving force for the Bitcoin market price. As the proportion of Bitcoin in MSTR's asset portfolio continued to rise, the correlation between the company's stock price and the price of Bitcoin was further strengthened. According to MSTR Tracker, the correlation coefficient between MSTR's stock price and Bitcoin price has recently surged to 0.55, reaching a historic high.

Since the middle of last year, MicroStrategy has adopted a new way of acquiring coins by issuing new shares and selling its own MSTR stock to buy more Bitcoin. This "sell stock to buy Bitcoin" strategy may initially sound very foolish, as it could potentially harm the stock price and even threaten MSTR's market positioning as a "leveraged Bitcoin" play. However, upon closer analysis of its logic chain, it is found that share issuance will not only have a negative impact on the MSTR price but will actually make MSTR more valuable.

Related Reading: "Why has the premium on MSTR suddenly soared despite the unchanged strategy of issuing debt to buy Bitcoin?"

When MicroStrategy issues shares to purchase Bitcoin, the newly issued shares typically trade at a price higher than their net asset value. Utilizing this premium, MicroStrategy, when selling each share of MSTR, will be able to buy more Bitcoin than what each share actually represents.

For example, let's calculate the correlation of MSTR with Bitcoin. For each share of MSTR, 36% of its value symbolizes the Bitcoin endorsed by the company. In a scenario without a premium, when MicroStrategy sells MSTR, they can only acquire 36% of Bitcoin from the market. However, currently, MSTR has a premium of around 2.74, meaning that each time MicroStrategy sells a share of MSTR, they can receive approximately 98% of Bitcoin.

This implies that the company can use funds exceeding the net Bitcoin asset to acquire more Bitcoin, thereby expanding its Bitcoin holdings on the balance sheet. The core of this strategy lies in MSTR financing through a high premium, thus accelerating the speed and scale of Bitcoin holdings, far surpassing the previous "issuance to buy Bitcoin" pace.

According to the latest 8-K filing, MicroStrategy achieved a 41.8% Bitcoin yield in 2024. From another perspective, this is equivalent to a net gain of 79,130 Bitcoins for shareholders, averaging about 246 Bitcoins per day—all without incurring the high costs associated with mining. If all global miners were to achieve a similar result, it would take approximately 176 days.

As per the most recent 8-K filing, in 2024, MicroStrategy realized a Bitcoin yield of 41.8%. In another perspective, this is equivalent to a net gain of 79,130 Bitcoins for shareholders, averaging approximately 246 Bitcoins per day—without the need to bear the high costs associated with mining. Achieving the same result with all global miners would take about 176 days.

Thus, Saylor has achieved two firsts: making MicroStrategy the first publicly traded company in history to purchase Bitcoin and incorporate it into a capital allocation strategy, and being the first company bold enough to borrow money to buy Bitcoin.

「Repairing the World's Balance Sheets」

Saylor not only buys for himself but also advises his business titan friends to buy.

Now, the "comrade-in-arms" with Trump, "Brother Ma Baoguo," Musk, was not so deeply involved in cryptocurrency four years ago. In December 2020, Musk posted a slightly mocking picture of a monk with hands folded in prayer, gazing devotedly upwards but unable to resist the temptation of Bitcoin. Saylor responded to Musk's post, suggesting that he should "do something worth a hundred billion dollars for Tesla shareholders" and convert Tesla's balance sheet from dollars to Bitcoin.

Musk asked, "Is such a large transaction possible?" Saylor replied, "Of course, I have purchased over $1.3 billion in BTC in the past few months and would be happy to share my operational strategy with you privately."

In February 2021, Musk's Tesla disclosed that it had purchased $1.5 billion worth of Bitcoin using cash on its balance sheet and announced that it would start accepting Bitcoin as a form of payment for its products.

In October of this year, Saylor once again called out Microsoft CEO Satya Nadella, saying, "If you want to make another trillion dollars for Microsoft shareholders, please contact me." According to an SEC filing, Microsoft is preparing to discuss possible Bitcoin investments at its shareholder meeting in December.

Time magazine once interviewed Saylor, and the reporter's first question was whether Bitcoin was an irrational bubble. "Even if one does not believe something has value, people will blindly join the game out of envy for others' success."

In response to this sharp question, Saylor confidently answered, "No, quite the opposite, Bitcoin is a textbook rational response to inflation. The so-called 'rational behavior' is to find a means of storing value that can preserve and appreciate. Speculation, on the other hand, involves tactics like shorting and squeezing to suppress opponents - that is speculation. Investing in Bitcoin is not speculation at all! Bitcoin is a new technology, comparable to Facebook and Google in the financial world, with tremendous potential for appreciation in the future."

The reporter then posed a more challenging question: "If that's the case, why does Bitcoin have such a bad reputation?"

"A new paradigm means a complete change in how we view the world, and incumbents are often unwilling to accept such new things. Our only hope lies in the next generation because unless there is a war or a very serious event, these incumbents will not change their views, but young people are different."

The reporter asked, "Do you have any ambitions?"

Saylor only said one sentence: "I want to repair the balance sheet of the whole world."

Michael Saylor's enthusiasm for Bitcoin is not just a business adventure but a belief. From a pioneer in data analysis to a staunch advocate of Bitcoin, he has driven MicroStrategy's transformation with strong personal will and business insight, demonstrating to the market how to reshape a company through extreme risk-taking.

However, this high-stakes strategy has also raised questions in the market. Some analysts are concerned that MicroStrategy's high-leverage exposure to Bitcoin could amplify the impact of market volatility on the company, especially in cases of extreme Bitcoin price fluctuations. Additionally, despite Saylor's claim to want to repair the balance sheet of the whole world, whether this vision can truly withstand the test of time remains to be seen.

Saylor has said, "Life is a game," and in this game about Bitcoin, he clearly has no intention of stopping.

Reference Articles

https://fortune.com/2022/08/03/michael-saylor-microstrategy-stock-bitcoin-bet-debt-outlook/

https://time.com/5947722/microstrategy-ceo-bitcoin/