What to Make of Michael Saylor?
MicroStrategy CEO Michael Saylor has a checkered past and complex motives for his public embrace of cryptocurrency.
If you’ve been following the crypto space since the beginning of the latest 2020 bull run, you’ve no doubt encountered Michael Saylor. The bombastic, square jawed tech CEO has appeared on virtually every crypto and gold-focused news outlet in the last 12 months, and has quickly become one of Bitcoin’s most well known influencers.
It’s easy to see why. Beyond the fact that Saylor holds the title as the first major institutional investor of Bitcoin (more on that later), he brings a level of charisma and storytelling ability to his media interviews that few can match. A consummate salesman, Saylor manages to tell the story of Bitcoin in a way that’s engaging, accessible, and exciting.
You’d be forgiven for thinking Saylor doesn’t have a day job, because he seems to spend the majority of his time making media appearances to talk about Bitcoin. On them he commonly drops comments like how Bitcoin is ‘the apex property of the human race,’ with its future ascendancy to a price of over $1 million a coin so logical and self evident that it’s almost a bore for him to explain it. In contrast, the US dollar and wider global economy is on an inevitable path towards hyperinflation and collapse in his eyes, with Bitcoin being the key to a savvy investor’s survival. For people considering investing in Bitcoin, watching a Saylor interview can be intoxicating.
Yet with all influencers in the crypto space, with attention comes scrutiny. There have been many hucksters in the past, and now that Bitcoin can command a significant portion of peoples’ net worth, due diligence is key. So who is Michael Saylor? Where did he come from, and can he be relied upon?
Saylor’s (Checkered) Past
Michael Saylor has a long history in the tech industry. After working at DuPont in the 1980s, in 1989 Saylor co-founded MicroStrategy, a business analytics firm. Over the course of the following decade MicroStrategy expanded into business intelligence, landing several high profile contracts before going public in 1998. Shortly thereafter it experienced a meteoric rise in stock price as part of the Dot Com Bubble, soaring to over $3000 per share in March 2000 before declining just as quickly.
This collapse in 2000 was the result of accusations from the Securities and Exchanges Commission that Saylor and his co-executives had ‘misstated’ MicroStrategy’s profits over several years, using creative accounting to gloss over its lack of profits. MicroStrategy’s official profits were revised into losses, while Saylor himself paid over $8.6 million in fines. He’s remained as CEO however, and never officially admitted wrongdoing. MicroStrategy soon moved beyond its 2000 controversy, growing into a firm of several thousand employees and a market capitalization of over $5 billion as of early 2021.
MicroStrategy’s impressive market capitalization, however, is a very recent phenomenon. The company had a capitalization of less than $2 billion for much of 2020, and rocketed up to almost $10 billion this past February. This rapid rise in value brings us to why Saylor is now so well known: his decision to use MicroStrategy’s capital holdings to invest in Bitcoin.
Bitcoin’s Milestone
Saylor made his big entrance into the crypto sphere on August 11th, 2020. That day MicroStrategy announced that it had bought $250 million worth of Bitcoin. On top of that, the company was adopting the cryptocurrency as its primary reserve asset. This was a huge development for Bitcoin, more noteworthy in fact than Elon Musk’s similar announcement a few months later.
Public companies bringing Bitcoin onto their balance sheets has long been heralded as a key milestone that the cryptocurrency needs to cross. With it, Bitcoin will have proven that it’s stable and legitimate enough for major institutions to adopt it, further integrating it into the global financial system and bringing greater price stability (though only after a huge price rise). More broadly, it would imply a confidence in the future value of Bitcoin over that of the US dollar. While other billionaires have publicly disclosed that they’ve bought Bitcoin, MicroStrategy was the first publicly traded company to announce that it had done so.
With MicroStrategy’s announcement came a flurry of media appearances by Saylor that to this day have not abated. He’s appeared on a surprisingly diverse array of outlets, from niche crypto and gold-focused programs like RealVision with Raul Paul and Stansberry Research, to high profile networks like Bloomberg and CNBC. Saylor’s crypto interviews are some of the most watched and shared clips of the past year from those channels. In them he tells the story of his journey from military brat, to MIT grad, to tech CEO who in early 2020 ‘saw the light’ with Bitcoin. MicroStrategy has since made several more investments in Bitcoin, holding over $2 billion worth as of May 2021.
The Closet Banker
While almost all major figures who talk about Bitcoin are open about their investments in it — Saylor included — there still exists a taboo, brought to the fore earlier this year with the r/wallstreetbets fiasco, about rich people going on TV and hyping up assets that they themselves own. It goes without saying that Saylor will personally benefit from a Bitcoin price rise, given that he owns 70% of MicroStrategy’s stock.
Even with his media prominence however, claims that Saylor is manipulating the market are grossly overstated. None of MicroStrategy’s announcements or Saylor’s interviews have brought on a major move in the value of Bitcoin. He could never hope to seriously influence its price. Bitcoin is no stock, or even a lesser cryptocurrency. It’s a massively decentralized asset with a sea of variables affecting its value and has a market valuation of over $1 trillion. No one person can meaningfully influence its price.
The real criticism of Saylor, characterized by Jacob Silverman in The New Republic and Kevin Raynolds in Yahoo Finance, comes from how MicroStrategy’s acquisition of Bitcoin has deliberately altered its financial center of gravity. Despite some drops, Bitcoin has risen significantly in value since MicroStrategy’s first acquisition. It is undoubtedly the reason why MicroStrategy’s valuation has risen so dramatically. The company’s stock has grown from less than $150 on the day of it’s first Bitcoin acquisition last August to over $500 as of May 2021. And this is for a company who’s revenues have declined every year since 2014.
It’s clear that MicroStrategy’s value has become intimately connected the value of Bitcoin. Critics have argued that it has become a defacto Exchange Traded Fund for the cryptocurrency. Saylor is not going on TV to hype up Bitcoin, he’s doing it to let everyone know that his company owns a lot of it, and won’t be selling any. Bitcoin’s rise in price, and thus a rise in the future value of MicroStrategy, is implied. Moreover, in the absence of an official ETF for Bitcoin, investors can get exposure to Bitcoin by buying shares in his company.
It should be noted that Saylor has acknowledged and denied all of these allegations, nor are any MicroStrategy’s activities illegal. There’s no denying how valuable Bitcoin has become without his help, nor is there any strong reason to doubt that it will continue to gain value in the future. Saylor has been able to accomplish what he has because, well, Bitcoin is a very unique phenomenon. It breaks a lot of conventional rules. It’s very large, and still continues to grow in value very quickly.
Just because Saylor has a lot to gain from his move doesn’t mean he’s wrong about Bitcoin. For a technology as potentially earth shattering as the cryptocurrency is, stranger things have happened. Tesla has made more money this year off of its Bitcoin trading than it has selling cars.
So then, what to make of Michael Saylor? His motives are complex, and he’s engaged in shady activity in the past. He’s also not breaking any laws with what he’s doing with MicroStrategy this time around. He’s realized what Bitcoin is capable of, and is using it to benefit his company, not scam anyone.
He’s clearly savvy at both finance and cryptography. In August of 2020 he made a bet, and that bet has continued to pay off for both himself and the people he’s convinced to join him.
Saylor is one of the best communicators of Bitcoin’s story and potential, and is an accessible way to become educated on what Bitcoin is capable of. He’s gregarious and makes bombastic claims, but that’s part of his persona. He’s an outsider, and willing to take risks. Bitcoin is itself still maverick and bombastic, still growing into itself. Still takes some time to wrap your head around. Be wary, but do not run away just yet.
