Pushing the company to the brink for ‘all-in’ Bitcoin, this billionaire had to give up the CEO seat to a Vietnamese-born engineer

If anyone asks billionaire Michael Saylor why he bets his company’s future on bitcoin, he’ll tell you he has no other choice.

In 2020, the stock of MicroStrategy Inc (MicroStrategy) is almost forgotten. The tech company struggles to compete with other software giants. “We will die quickly, or die slowly, or have to pursue a risky strategy,” Saylor said.

Saylor chooses to buy bitcoin – a lot. In the end, that decision betrayed the owner, in the most disastrous way. In early August, MicroStrategy announced that Mr. Saylor would be relieved of his position as Chief Executive Officer (CEO) of the company – a position he has held since 1989 – due to losses due to bitcoin.

Michael Saylor’s reckless bet on bitcoin dates back to August 11, 2020, when his company announced plans to use $250 million – half of what MicroStrategy has – converted to bitcoin. Then they continue to bet more money, and bet again.

In total, MicroStrategy has raised $2.4 billion in debt. Not to mention, they also raised another 1 billion USD from the issue of shares. MicroStrategy used all of this money to buy bitcoins.

At one point, this decision proved the right one. The price of bitcoin has increased from $11,900 in August 2020 to nearly $69,000 in November 2021. MicroStrategy’s stock price the previous day was only 124 USD, the next day, 9/2/2021, had increased to a record high of 1,273 USD.

But on August 2, MicroStrategy announced a loss for the seventh consecutive quarter in the eight quarters since it started buying bitcoin. This time, the loss was huge: $1 billion, largely due to bitcoin.

On the same day, Mr. Phong Le – Vietnamese-American engineer, joined MicroStrategy in August 2015 – took over the “chair” of CEO MicroStrategy left by Mr. Saylor.

MicroStrategy’s share price is down 49% year-over-year and down 78% from its historic high.

MicroStrategy is said to hold nearly 130,000 bitcoins, with a market value of around $3 billion. Meanwhile, the company’s market capitalization stands at $3.1 billion.

MicroStrategy’s loss clearly reflects bitcoin’s volatility.

Under current auditing regulations, the company needs to reassess the value of its bitcoin holdings quarterly and must account for it if the price of bitcoin falls.

MicoStrategy has incurred such fees several times, totaling $2 billion.

Betting on bitcoin, billionaire Michael Saylor has also become one of the strongest supporters of this digital currency.

His tweets on Twitter, which has about 2.6 million followers, are always filled with pro-bitcoin satire.

He is also often overly optimistic in interviews. Once, Michael Saylor advised people to “take all the money to buy bitcoin. Then spend all your time figuring out how to borrow more money to buy more bitcoins. Then spend all your time figuring out what you can sell to buy bitcoin.”

Similarly, at a conference full of crypto enthusiasts in Miami, he advised people to never sell bitcoin.

This is a philosophy that worries some market watchers.

“MicroStrategy is not an ideal investment for most traders,” said Edward Moya, an analyst at exchange Oanda.

According to Moya, MicroStrategy’s strategy is to buy and hold bitcoin, with no take-profit trades and no hedge against volatility or dips in the cryptocurrency. Therefore, when a bitcoin sell-off occurs, MicroStrategy will suffer the entire negative impact.

Another problem is that the company doesn’t have many ways to make more money buying more bitcoin, said Mark Palmer, an analyst at BTIG. “MicroStrategy is now just using money from the software business, nothing else,” he said.

However, Mr. Palmer said that MicroStrategy’s bitcoin bets should not be evaluated until some of their bitcoin debt matures. If the price of bitcoin falls, the company will have a hard time paying its creditors, he said.

“Time is ticking and MicroStrategy’s debt is coming to maturity,” he said.

Despite many risks and criticism, Mr. Saylor still believes in his strategy, and also in bitcoin. In an interview earlier this month, he emphasized that the stock price remains above pre-bitcoin levels, and is confident that his strategy will position the company, despite the many risks that come with it.

“I feel better about it now, than the day we started,” he said.

Saylor said that he will continue to lead MicroStrategy’s bitcoin investments. He has no plans to sell any bitcoin, and still expects it to regain value in the coming years. The company also reiterated that it has no intention of selling bitcoin.

Saylor says the CEO swap is just a long-term plan. “The company’s new governance structure means that I can focus more on my strategy, and continue to pursue bitcoin,” he said.

Who is the new CEO of MicroStrategy?

Phong Le holds a bachelor’s degree in biomedical engineering from Johns Hopkins University and a master’s degree in business administration from the Sloan School of Management, Massachusetts Institute of Technology (MIT).

From 1998 to 2010, Mr. Le worked at Deloitte auditing company. From March 2010, he moved to NII Holdings – a telecommunications company listed on Nasdaq, and held many senior positions here, including: Deputy Director of Financial Planning and Analysis. , and Vice President of Strategy and Business Operations.

In August 2014, he joined XO Communications and held the position of CFO here until August 2015.

MicroStrategy can be considered as the technology enterprise that Mr. Phong Le has been with the longest in his career.

He joined MicroStrategy in August 2015 and held many senior positions at this company, such as: Deputy CEO, CFO; Chief Executive Officer (COO) and Chief Financial Officer (CFO). By August 2022, Mr. Le was elected to the Board of Directors of MicroStrategy./.