When Bitcoin hit its peak price of $65,000 in the last quarter of 2021, Michael Saylor was a genius. Unfortunately, his period of genius lasted for only about a year.
In the middle of 2020, Saylor spent over a billion dollars purchasing Bitcoin. When his company, a publicly traded tech company called MicroStrategy, purchased the first tranche of Bitcoin, they did so at an average cost of $15,000. The next time they made a purchase, the company did so at an average price of $23,000.
Saylor faced significant opposition as he purchased these coins. People believed Bitcoin’s price would plunge, and the investment would prove to be shortsighted. But barely a year later, he would be proven right as the soaring price of Bitcoin doubled MicroStrategy’s investment.
At this point, many investors would have decided to pack up and enjoy their profits. But not Saylor. He decided that he would simply buy more. He believed that Bitcoin was the future, and he would be an essential part of it.
Michael Saylor, Most Likely to Succeed
Michael Saylor is, by all accounts, an extremely brilliant man. As a young child, he was a voracious reader; by the time he was done with high school, he’d read thousands of books. His brilliance was recognized by his high school when he was voted the most likely to succeed. He was also the valedictorian.
Saylor went to MIT, one of the world’s most exclusive and academically rigorous institutions. He could only afford the tuition because he was on an ROTC scholarship. He finished his studies at MIT and graduated with double majors in aeronautics and astronautics; and science, technology, and society.
Saylor wanted to become a pilot, but he couldn’t due to a medical condition. He had a benign heart murmur, which meant he couldn’t pass the physical exams. He also had dreams of being an academic but found it challenging to get fellowship funding.
Since he couldn’t get a job flying planes, Saylor decided to try other avenues. He started working with a consulting company where he developed computer simulation models. The company packed up in six months.
Saylor went on to work at Dupont, where he developed computer simulation models to help companies anticipate and predict fundamental market changes. He had already worked on computer simulations at MIT at this point. In his thesis, he designed a Renaissance Italian city-state with three branches of government and used computer science to design a more equitable and stable government for the state.
The simulations that Saylor developed anticipated that there would be a recession in many of DuPont’s markets in 1990. Saylor’s relationship with DuPont eventually led to the chemical giant seeding his own company, which became the tech giant MicroStrategy.
The Birth of MicroStrategy
Micheal Saylor founded MicroStrategy in 1989, and the company has consistently defied the odds. MicroStrategy wasn’t like the many other so-called tech companies that were really vehicles for a lucrative exit.
Every year, MicroStrategy provided value to the companies it consulted for, and every year it turned a profit. That was how it pulled itself by the bootstraps to become a publicly traded billion-dollar company.
Saylor wasn’t the average tech founder who would sell his company for profit. His goal was to change the world, and MicroStrategy was the right vehicle to do that.
Saylor had always wanted to build something so important that he would be spoken of in the same breath as Caesar or Thomas Edison. He’d always wanted to invent the future. He believes that sheer willpower can create reality, no matter how radical. This ideology drove Saylor and would ultimately explain the incredible risks he was willing to take.
MicroStrategy started as a simple data mining business. The company developed software for data mining and sold it to companies that needed it. However, things changed in 1992 when MicroStrategy received a contract to help McDonald’s develop tech that helped it analyze the efficiency of its promotions.
It was that contract that helped Saylor to understand that intelligence was the future. In time, Saylor became obsessed with other types of intelligence. He realized intelligence was a ubiquitous value, and MicroStrategy could harness it to propel humanity forward. This propensity to always look for the next big thing is one of the things that drove Saylor to Bitcoin.
The Bitcoin Adventure
In 2020, Micheal Saylor made a shocking announcement on an earning call with shareholders. He painted a bleak picture for the future of fiat currency and argued that the returns from holding cash were falling, and the strength of the dollar was fading.
Consequentially, Saylor argued, the smartest thing would be to hold the currency of the future instead of fiat. He said the future was Bitcoin, which was attractive because it was a dependable store of value.
Saylor said he believed that the way forward for MicroStrategy was to buy Bitcoin with its cash reserves. At the time, MicroStrategy had reserves of about $550 million. Since the company only needed around $50 million on hand to operate, Saylor had enough leeway to invest as much as he could in Bitcoin.
Saylor controlled over 70% of MicroStrategy’s voting shares, so he technically had supreme control over the company.
In the short term, Saylor’s investment paid off. MicroStrategy bought over twenty thousand Bitcoins in August 2020 at an average price of around $11,500.
MicroStrategy announced in December 2020 that it had bought a total of 70,000 Bitcoins with an average purchase price of around $16,000. As MicroStrategy bought Bitcoins, so did Michael Saylor.
In October 2020, Saylor announced that he’d personally purchased 17,732 bitcoin at an average price of $9,882. By October 2021, the Bitcoin Saylor personally held was worth over a billion dollars. When he made the purchase, he’d paid over two hundred million. That reflected an unrealized capital gain of over 500% in a year. Not even the best-performing hedge funds could offer such astonishing returns.
Saylor had gone all in on Bitcoin and reaped extraordinary returns. The share price of MicroStrategy was rising due to its crypto investment, and Saylor’s wealth was ballooning out of control.
If Saylor was only in it for the money, he might have started selling at the top. His investment had seen a 500% increase, and he’d made as much money as anyone could make in under a year. But Saylor didn’t just see Bitcoin as an investment vehicle. He saw it as the currency of the future, and the price of Bitcoin was a mere addendum. That’s why in 2021, as Bitcoin started to slip and tumble down, he posted a tweet declaring he was a Bitcoin maximalist.
Bitcoin maximalism is the belief that Bitcoin is inherently superior to all other digital assets and that, in the long term, it will be the only digital asset that survives and provides actual value. This belief may sound a little outrageous, given that there are hundreds of other digital currencies in the crypto space today. In any case, Saylor believes this, and it fuels his decision to not just invest in Bitcoin but to hold it with religious fervor.
The Bear Market
Unfortunately, the market doesn’t reward religious fervor. At least not in this cycle. When Bitcoin began to slip, MicroStrategy rapidly went from making to losing money. As Bitcoin prices plummeted, the company lost roughly $1.8 billion.
Through this loss, Saylor remained unphased. As a Bitcoin maximalist, the short-term price of Bitcoin was noise to him. It didn’t matter in the long run since he believed the coin would eventually outperform all other digital assets and even fiat. The loss, as it were, was merely a minor inconvenience.
But that was just for Saylor. The losses themselves were wreaking absolute financial havoc on MicroStrategy. They had gone all in on Bitcoin, and Bitcoin had burnt the company’s fingers.
In the end, Saylor had no choice but to resign as the CEO of MicroStrategy. He handed over the company to Phong Le, the former CFO. While he retained his position as executive chairman, the company’s day-to-day running was put in Le’s hands.
One would imagine that this devastating loss would make Saylor rethink. But it didn’t. He only doubled down on his Bitcoin purchase strategy. Saylor resigned, not because he didn’t believe in Bitcoin or believed he was wrong— he left because he wanted to have more time to promote and purchase Bitcoin. Hence, the company was doubling down on its strategy, not changing it.
And that’s precisely what Bitcoin maximalism is.
On the Flipside
- Phong Le, MicroStrategy’s new CEO, doesn’t have the same passion for Bitcoin as Saylor. Therefore it is plausible that the company will be more restrained in its Bitcoin purchase strategy.
Why You Should Care
Michael Saylor is currently one of the highest-profile promoters of Bitcoin. It’s important to know why he supports Bitcoin and how strong his resolve is. This may help influence investment decisions and generally help people better understand the future of cryptocurrencies.