MSTR Saylor

Michael Saylor is tall with smart eyes, a rectangular face, white hair, and a white beard.

He looks wise.

When he speaks, he has a slightly pitched voice. Pay attention and the words; capital, money, energy, Physics, and cyberspace will be mentioned. He tends to convey some new meanings of these terms, and novel ways in which they relate to each other.

Saylor is also the founder of MicroStrategy, a Business Intelligence company started way back in 1989 that struck success when it signed a $10 million contract with McDonald's. It increased revenues by 100% each year between 1990 and 1996 (Wikipedia).

Wow, what is Business Intelligence?

Like other business consulting companies and similar to asset management firms, hedge funds, mutual funds, _ fund, Berkshire Hathaway, and that anonymous day trader in your Twitter/X feed, these make money without directly moving the earth like engineers, or fixing bodies like doctors.

They all profit by moving money from one person’s pocket into another person’s pocket. Could be their pocket, could be yours, could be McDonald’s, Tesla, or Meta’s pocket.

They could do it by moving their own money. Which for most companies isn’t much. Or, they could do it by enticing richer people and bigger companies with deep pockets, to move truck-loads of their money this way and that in such a way that the frictions in the cash flow are removed for everybody.

Hoping we all agree on what money means. Because it is foundational to this story.

Sometime in 2020, Microstrategy adopted a Bitcoin acquisition strategy. This was when Saylor bought his first bitcoins as a corporate move to hedge against inflation. He has since pegged the growth of his company and his shareholders’ profit all on one asset.

Bitcoin.

He is continually putting all his eggs in the most volatile basket in the commodities market and is doing so faithfully. A lot of smart people disagree. But not the numbers. The numbers totally agree.

For instance, something interesting is happening this Q4 of 2024.

$MSTR, the dollar peg to the MicroStrategy stock, is outperforming its base asset - $BTC - in capital gains.

This means that while Michael Saylor buys BTC like every Bitcoin maximalist, somehow, his company is making even more money than the gains on those bitcoins.

I find that interesting.

Allow me to also mention what Mr. Saylor has said (paraphrase).

I hope to create a trillion-dollar Bitcoin Bank! - Source

From Banking Gold to Banking Bitcoin

First things first.

Michael Saylor is buying Bitcoin using debt.

There, I said it (reference)

This is from an influx of newly orange-pilled shareholders and from banks.

Sounds bad.

I tweeted (xeeted?) as much the first time I saw the MSTR numbers.

Have a look yourself. It is a striking performance.

The only question is, how does it make sense in the long run?

Well, Banking and Corporate funding are different. MSTR is still a publicly traded company, but Mr. Saylor might have found a way to make it bank-like and startup-like at the same time. A most unusual thing. A perpetual Bank-Startup.

Although, Bitcoin could be the reason why it’s working at all.

You see, Bitcoin is a strange asset. It’s a little alien.

Like a quantum bit, Bitcoin is the only asset that can be in a superposition of two states at the same time. In one state it is money, so its best utility is moving around in a circular economy. But it is also a hard asset like gold or real estate, so it might be best to hold onto it for the long term and not to use it for trade.

To borrow an old adage,

To spend or hodl BTC, that is the question.

It is a hard question. One that’s being experimented on in real-time.

Here is something else. Strange as the world of two-state quantum superpositions can be, even stranger is the fact that Bitcoin is also a big digital narrative. Like Wikipedia, except woven immutably into what is called The Blockchain. A piece of software some 700+ GB in size, whose core objective is to keep getting bigger.

Bitcoin is thus a 3D asset.

The only one of its kind.

The most elaborate fountain of rich crypto-narratives we have on earth. If you could read and decipher the Bitcoin blockchain like some expert cyber historian from the far future, between the lines of each transaction would be tales of nefarious drug deals on Silk Road and beyond, adventures of lost keys on boat cruises, hush-hush secrets of keys kept in some politician’s office until they eventually sold them. Tales of Ws and Ls. A lot of tales of cyber hacking and bank-breaking by teenage whizzes in their underwear, and black hats seated in the comfort of big government buildings far underground.

This is the narrative side of Bitcoin. The side that, I believe, Michael Saylor is hoping to sell to billions in exchange for dollars, yen, cowrie shells, firewood, anything that will help him buy more bitcoins.

The side that will return real value on all that debt he has shored up.

And it’s working so far.

On the hodler angle, the sparking of war between Russia and Ukraine in 2022 was good for BTC buyers, with BTC falling to prices as cheap as $16,449. Interestingly, Saylor bought very few bitcoins in this year. Guess he too got scared.

Overall, Saylor is running by the same playbook as the great banking families at the inception of their legacies.

Buy as many hard capital assets as you can for cheap. Hodl them for decades.

Corporate funding > Corporate profits in this age

Take Amazon, for instance. For more than a decade, it was not a profitable company but it grew and it grew.

True, Jeff Bezos was selling books and toys and later AWS services. But more than that, he was selling the promise of a great company.

People bought more AMZN stock than they did Amazon.com products.

So, while the company was operating on a loss viz income vs expenditure, they were racking up profitable stock valuations which they were using to grow.

Feels a little like a Ponzi scheme, but it isn’t.

Here’s Jeff laughing about it all.

People buy the stock, the price shoots up, other people find that attractive (plus the stories, don’t forget) and want to buy too, and the price shoots up again. But there are real products and valued services coming out of the garage. And real growth capitalizing on the naiveté of a quick buck by market players.

Amazon eventually made and continues to make a real profit. If you don’t buy their stock anymore, no problem. They can operate just fine selling you stuff on Amazon.com.

The new MSTR on a Bitcoin Acquisition Strategy is currently operating like Amazon.com in its early days.

Just with a very lean product development cycle. With one key employee - Saylor himself.

#Founder mode.

Just like many an upstart crypto company these days, funding is everything. Profits? Maybe, maybe not.

Saylor is attracting investors to his young future Bank/Startup Company (MicroStrategy on a Bitcoin standard is only 4 years old) with dazzling speeches and awesome chart graphics projected for his audience and shareholders to see and be filled with hope and wonder.

He tried selling Bitcoin DIDs, but that didn’t go well with the maxis, so he doubled down on selling good ‘ol “To the Moon” Bitcoin stories, sprinkled with tasty Physics and Cyber speak.

He has racked up some millions of YouTube views.

With AdSense, these would hardly fetch a couple of million dollars. But his target audience has deep pockets.

Luckily, they are sold.

Hence $MSTR >> $BTC.

Say, this too is a pro-Saylor Bitcoin story. Any chance it might bump that $MSTR ticker? :D (*wink *wink).

Will ‘The Biggest BTC Reserve on Earth’ be a good enough story?

Bitcoin will remain money more than anything else. Be that a super hard asset or a mega story or let’s-wait-and-see.

So it isn’t clear if, on its journey to trillion-dollar status, the Bank of MSTR will be loaning its BTC – its digital golden money - to people and governments.

The Banking model on the gold standard suffered major challenges such as the refusal of governments to pay back the gold they had been lent for their wars and stuff, which is why most banks welcomed the switch from full-reserve banking to fractional reserve banking. And eventually, the switch to a fiat standard.

Backed by the full might and power of the currency-issuing nationalized Central Bank. If the state defaults on the Bank loan, no biggie. They own the money. Many Bankers became the Beta in that relationship.

What happens then when the Bank of MSTR loans governments its BTC? Since they (governments) do not back BTC nor have much power over its issuance nor much power to influence its trade routes, like they can do with gold, will they be more compelled to actually play nice?

Hmm.

It’s tricky. But interesting.

It is going somewhere huge, that’s for sure.

Two, if Saylor’s bank goes the custodial option eventually (“come hold your BTC alongside mine”), then he will be up against big crypto exchanges like Binance. Who dabbles in anything crypto as long as it has a good enough storyline, understandable tokenomics, and some worthwhile liquidity?

Three, if Saylor is to keep making great podcasts and public speeches that attract $Investors, his big story might be ‘MSTR will remain the biggest corporate BTC reserve on earth’. But what if asset management giants like BlackRock or tech giants like Microsoft and Google, step in to play this game? Will the Bank of MSTR still hold first place in this marathon?

$MSTR may end up flying just a few lengths above the $BTC graph. If not lower on bad trade days.

Which will be okay.

If the Bank of MSTR, on its journey to cosmic profits, even slightly orange-pills great governments or multiple tech giants like Google, it will have left a lasting legacy.

What can I say,

$MSTR to the moon.

Post Script - AI

Digital intelligence companies like Google and Microsoft could leverage digital capital (BTC) better than Microstrategy because AI equals digital superpowers. They could be running AI to provide business intelligence for MicroStrategy. Hell, Saylor might be seeing a huge buy-out cheque sometime soon.

Especially if everybody tries to hand him money, debt, cowrie shells, their ideas, and their time for a piece of his super-hodled BTC stock options. Because of those sweet stories on and about the Timechain.

AI stories too, sooner or later.

Whoah!

If the AI behemoths get it, their GPTs will see a leap in capability like no other. For BTC, it is the perfect value metric to measure the quality of digital intelligence in cyberspace. Which is the internet.

I mean imagine an AI dataset that gets more valuable over the years. This would perfectly peg to $BTC. If the wildly fictional road to AGI is to be believed, then its trajectory will have to mirror this trend. Not the trend of mere $, which loses value over time. AI datasets today of cats and dogs and Will Smith eating pasta, lose value very quickly over time.

Might be worth being compared to Zimbabwean dollars.

Don’t know if you get it.

Might be kinda hard to get.

If AI corps remain stuck with fiat, well and good. This gives the humans some time to form very tight bonds with their digital capital. So that the AI overlords do not get even an inch of our cyberspace farmlands.

Indeed, stubbornness and sticking to one’s horse carriage shall be good for the sake of humanity.

Very interesting times ahead.