TYSON, VIRGINIA – Micheal J. Saylor, founder and CEO of the multibillion dollar company and dotcom darling MicroStrategy, made both headlines and billions through the company’s recent purchases of Bitcoin.
Despite suffering a fall from grace in the tech world after the dotcom bubble, MicroStrategy continues to stride the nexus between big data, industry and government, maintaining the analytic information systems that power the security and corporate state. As we explore a wide variety of relationships in finance, industry, and government throughout MicroStrategy’s history, we’ll find that much of the story lies outside of the power or position of this particular company.
After learning that Blackrock owned approximately 16% of MicroStrategy’s shares during my research for Bitcoin, the Next Evolution of Global Financial Empire, the company became an object of focus for me and I found all sorts of interesting ties to the military intelligence industrial data analytics world.
Any story of Saylor and MicroStrategy requires a brief introduction to the founder’s unique personality. Presenting as a sort of neo-roman-conservative-discipline-guru-tech-scholar, Saylor pontificates his business opinions and moralistic positions profusely. Common quotes include statements such as “we’re purging ignorance from the earth” and other bombastic comments about the company’s service to mankind.
“I don’t think it’s my goal to change everything in the world,” he says, “but it is a quasi-religious decision to raise reality from ignorance to a new reality–omniscience. It would be an abomination in the eyes of God if he had to live in the world we live in.”
Saylors’ outspokenness about “purging ignorance from society” highlights the drivers of a hyper-rational mind committed to ‘bettering humanity’ in the modern age. Saylor’s personal fascination with the culture of western empires, especially the Romans, along with his military background provide context to the services MicroStrategy supplies.
MicroStrategy: forming the big data paradigm
The military runs in the blood of the Saylors family. His father was a Chief Master Sergeant in the air force, which represents the highest rank attainable by someone without a college degree. Only one percent of the air force can retain this rank at any moment. Growing up his family traveled all over the world due to his fathers service, eventually settling in Dayton, Ohio.
Saylor says he grew up middle class and that his family’s net assets were only around $3,000 dollars. The highly motivated and ambitious young Saylor, valedictorian of his highschool, enlisted in the Reserve Officers’ Training Corps (ROTC) scholarship program in order to pay for his tuition at MIT. According to his thesis advisor, Saylor finished school with a 4.8 grade point average and in the top 1% of the graduating class.
Many MicroStrategy employees including the cofounder Sanju Bansal were MIT alums. After school, Saylor wished to enlist in the air force, but failed the physical due to a benign heart murmur. This sudden roadblock left him directionless.
After working at a small, soon-to-be defunct firm specializing in computer models in the late 80s, DuPont Corporation hired Saylor to run simulations on the company’s titanium business. He was able to predict a recession for the early 90s and impressed the company enough to earn support in expanding its analytic capacities. In Saylors words, “I basically got an education in software on DuPont’s money because they were too stubborn to admit that a recession was coming.”
In a Charlie Rose interview, Saylor Recounts the DuPont experience “I told them [DuPont] I quit, I will build your global multi user network war game, as a contractor…” He then went on to ask them for funding and it was here that MicroStrategy began. They gave him office space and $250,000 (100,000 upfront) in informal start-up money. Bringing on fellow MIT graduate and fraternity brother Sanju Bansal, Saylor began building the company’s capabilities. At first the company worked in consulting and services, but by 1991 they had released their first software product with an eye towards data mining.
Officially founded in 1989, MicroStrategy emerged on the public stage during the dotcom hysteria of the early 2000s. Saylor’s intense personality and outspokenness about his company’s positivist vision attracts media attention as well as capital. While MicroStrategy’s story started at Dupont, Saylor continued to seek customers with strong ties to intelligence and military.
Between 1990 and 1996 MicroStrategy increased its revenue over 100% each year. Their first major client was McDonald’s in 1992, winning a 10 million dollar contract to work on analyzing the effectiveness of their ad campaigns. By the late 90s, MicroStrategy could boast major customers across all industries as well as state, federal and foreign governments.
IPO and Fallout
Driving hype appears to be a pastime for Micheal Saylor. The boisterous executive certainly did not start with Bitcoin. The Washington Journal enjoyed special access to the IPO roadshow as Saylor went on to pitch MicroStrategy to wealth fund managers, such as Meyrl Lynch, Fidelity and Bear Stearns. Claims of purging ignorance from the earth were not purely for the press; that pitch extended to the kingmakers of Wall Street during the highest period of stress many companies had ever faced. Saylor’s steadiness and resolve pleased the financial operators and MicroStrategy held a successful initial public offering.
Saylor took the company public on June 11, 1998 at the age of 33. Adamant about not giving control of his company to Wall Street, Saylor raised capital while retaining over 50% of the voting shares. He sold 4.6 million shares to raise $55 million dollars. Currently, Saylor still controls 50 percent of the voting power. Other major stockholders include Blackrock, with ~16% of outstanding shares, Capital International Investors ~12.25%, Vanguard ~9% and Morgan Stanley ~5%.
The stock fumbled around through the rest of 1998 and the early part of 1999. In April and May of 1999 the stock traded at around 80 dollars. At the peak of the dotcom bubble for MicroStrategy, March 10 2000, one share was worth over $3,100 dollars. In the crash, Saylor lost over $6 billion dollars in personal wealth in one day. Besides the market-wide bubble burst, MicroStrategy had other issues with the SEC.
A $52 million-dollar deal with the National Cash Register (NCR) Corporation was inked in September around midnight on the last day of the third quarter of 1999. In the following section, I cover NCR and their business dealings with MicroStrategy in more detail. In the meantime, it is worth noting that the aforementioned deal ended up as the centerpiece of an SEC investigation into accounting fraud. In short, MicroStrategy included it in the 1999 Q3 earnings report while NCR filed it for 1999 Q4. Instead of a 34% percent revenue increase, the NCR deal showed over a 100% year over year. In the world of high growth tech stocks, weak earnings can destroy a company’s momentum. This, among other accounting issues, resulted in a personal disgorgement for both Saylor and two of his executives, to the tune of millions of dollars, as well as tainting MicroStrategy’s public reputation.
Relationships in Military, Intelligence, Finance
In 1999, MicroStrategy’s first full year as a publicly-traded company, it landed a deal with an historic company in the realm of sales, advertising, manufacturing, military communications and data services.
National Cash Register corporation was founded in 1884 by John H Patterson and, as the name suggests, sold cash registers. However, beyond simply selling cash registers the company also pioneered state-of-the-art automatic counting machines, created the modern sales industry and invented many of the financial technologies which dominated the early 21st century, such as credit card magnetism, barcodes, computerization, and ATMs. IBMs development as an international giant occurred under the leadership of Thomas J Watson who worked at NCR before being fired by John H Patterson.
Author and information history expert James Cortada maintains that the history of computing rests in the office appliance industry where typewriters, adding machines and other appliances led to early data processing and set the stage for computers. NCR was at the heart of this paradigm and its transformation, holding the fundamental patent for the cash register and dominating the cash register market and adjacent markets. Their familiarity and expertise in data processing systems signalled usefulness for the military in communications during the wars. The company’s international connections may have contributed as well. By WWI over half of NCR’s revenue came from international business.
Counting systems, just like code breaking machines, are data processing systems. During both world wars NCR produced military equipment along with more specialized items such as code breakers. NCR helped the military develop communication capabilities with both hardware and mathematical understandings of communication systems. In the NCR campus, the military occupied a building as the site of a top secret code breaking laboratory. This lab contributed to the cracking of the German Enigma code in WWII.
The company shifted from counting machines and registers to computers, databases and data warehousing. They employed world-class engineers and produced some of the first commercially available computers. Today they specialize in “enterprise software” and offer a wide variety of services and products to government agencies, banking institutions, telecom, retail and restaurants companies.
In other words, NCR was a major player, especially in the early years of the data industry, but also held connections all over the world of finance, government and industry. Partnering with such a company would help secure MicroStrategy’s status as a serious venture. By 1998, MicroStrategy had already sold at least over $250,000 dollars-worth of services to NCR according to their annual report. Along with NCR, MicroStrategy was already selling services to recognizable names such as: Bank of America, CIBC, Visa network, Freddie mae, Fannie Mac, GE capital Royal Bank of Canada, IBM, CVS, Oracle, the Air Force, Dupont, General Motors, Nissan, Samsung, Koch Industries, Monsanto, Universal Studios, Kohls, KMART and USAA insurance.
MicroStrategy pursued a multi year courtship to seal the deal. The terms read:
Singed a OEM agreement for 27.5 million for use of MicroStrategy's entire suite of Intelligent E-Business products and services
MicroStrategy bought terra data warehouse for 11 million to power its strategy.com venture
NCR became a master affiliate of strategy.com
As part of the agreement, MicroStrategy will provide NCR's future OLAP technology. MicroStrategy has agreed to purchase NCR's TeraCube business and all related intellectual property in exchange for 283,186 shares of its Class A Common Stock
According to Mark Gibson, who was hired by MicroStrategy to pursue the multi year courtship and wrote blog posts about the experience stated that,
NCR Teradata owned the lion’s share of the high-end retail data warehouse market and still do today. Teradata was omnipresent in the World’s largest data warehouses in the retail, telco, airline reservations and financial services markets
The 27.5 million dollar contract enables NCR’s use of MicroStrategy’s products in NCR’s own offerings. MicroStrategy eventually claimed a loss on the teracube business purchase (which I speculate was probably planned in advance, since OLAP technology is what MicroStrategy specialized in the first place and wouldn’t need the teracube company, which never was ready to commercialize at NCR)
According to the Washington post, a Merrill Lynch & Co. analyst heralded it as “5x bigger than any deal in [MicroStrategy’s] history . . . a watershed event.””.
In 2005 NCR and MicroStrategy announced that NCR would continue to resell MicroStrategy’s analytic services within the Teradata platform. The relationship continues to this day and according to a joint presentation with Teradata in 2021, the two companies meet bi-weekly to confer on roadmaps and customer issues. Teradata sits as one of MicroStrategy’s ‘diamond level certified data gateways’, along with Microsoft’s SQL server, Amazon redshift, Oracle, and IBM DB2.
More research is warranted on the NCR corporation, as their work on top secret communication systems indicates a potential involvement in Continuity of Government planning as well as other secret intelligence networks. The company’s role in banking, sales and finance on an international scale since the late 1800s also indicates a relationship with the international intelligence community. The deal with NCR showed where the young MicroStrategy already stood, and where it aimed to reach.
Facebook’s ties to the intelligence community are well known and documented. Two quick examples include hiring the Atlantic Council in 2018 to work on “Election campaign disinformation” and recently hiring ex NATO press officer and current Atlantic Council senior fellow Ben Nimmo. Recent Facebook “whistleblower” Frances Haugen, testified in congress recently, stating at one point that:
“…I believe Facebook‘s consistent understaffing of the counterespionage, information operations, and counterterrorism teams is a national security issue,”
So, she’s admitting that Facebook hires counterespionage, information operations and counterterrorism specialists. Services such as MicroStrategy inform the decision-making of those types of operators.
Besides Facebook, MicroStrategy works with various defense contractors, security focused government agencies such as the Department of Homeland Security, FBI, Army, Navy, Housing and Urban Development (HUD), and titans of industry and finance including names like Monsanto, Koch Industries, and Bank of America.
Within the DHS, MicroStrategy enjoys a long standing relationship with the TSA, dating back to 2004 and extending to the present. Primarily, the TSA uses MicroStrategy for employee management and performance indicators at airports. Their services generate over 45,000 reports per day to 40,000 TSA and other governmental employees.
Former director at CSIS (Center for Strategic and international studies) Rick “ozzie” Nelson currently works for MicroStrategy as vice president and general manager for the public sector. With a long and decorated military career in the Navy, Nelson worked for various think tanks, focusing specifically on counter terroism.
MicroStrategy works with MORS the Military Operations Research Society as a bronze star member. MORS, as the name hints, focuses on military research and serves as a place for confidential and public research to take place. Various employees have switched between SoSI, military and enterprise technology provider, and MicroStrategy. The section below highlights MicroStrategy’s work on digital identity with weapons manufacturer Northrop Grumman.
MicroStrategy partners with Amazon for a variety of products, most notably Amazon Redshift. Redshift focuses on cloud based data analytics and warehousing and is included in Amazon’s government-tailored cloud solution Amazon GovCloud. GovCloud provides states and federal governments with an isolated cloud environment, which can be fitted for various levels of secrecy and compliance with regulations such as arms data regulations.
Chains of Trust
In 2010 an analyst at Forrester, an advisory and research company based in Cambridge MA, coined the phrase Zero Trust Architecture. ZTA is an industry buzzword that represents a major trend in cybersecurity throughout business, government and military.
ZTA refers to a paradigm shift in cybersecurity in which neither location in a network nor asset ownership (i.e., a password to some account) can solely access resources in the system. Instead of protecting access to parts of a network ZTA focuses on protection of the resources within a network by utilizing strict digital identity (NIST abstract). A cloudflare blog post explains the difference between traditional IT and ZTA:
Zero Trust security is an IT security model that requires strict identity verification for every person and device trying to access resources on a private network, regardless of whether they are sitting within or outside of the network perimeter.…
…More simply put: traditional IT network security trusts anyone and anything inside the network. A Zero Trust architecture trusts no one and nothing.
This architecture ties in digital identity to facilitate a “least privilege access model” (DoD ZTA paper) where the system only allows users to access applications that are absolutely necessary for them to use.
MicroStrategy perceived this trend and offers digital identification products and services directed towards the government. They developed a mobile application named Usher working in partnership with Northrop Grumman, one of the world’s largest weapons manufacturers with annual revenues exceeding $30 Billion. Usher provides biometric and location based authorization and also tracks the user to provide: “…critical back-end information on user behavior and resource usage…”
The service is used by Northrop Grumman as well as Georgetown University. In a 2015 press release the company also revealed that customers include SenHeng Electric subsidiary Blackbox BI Consultancy, global incubator 1776, and the Saudi Arabia Ministry of Foreign Affairs.
When asked how digitally-based identity will take off in mainstream culture he stated: “The thing that will catch this all on fire is civic identity” referring to the day when cities and states recognize the use of software based drivers license and other traditionally analog identifications.
Clearly a player in the digital identification and authorization hierarchies of the government and industry, MicroStrategy works to implement Zero Trust inspired tools. Federal News Network reports statements from Beth Cappello, deputy CIO of Department of Homeland Security at the MicroStrategy World 2021 conference:
By rapidly implementing IT and security improvements to reduce risk, it [zero trust] will help the Office of the CIO address the remote work posture of our employees…
…From a technology perspective, the zero trust architecture approach allow us to ensure we have a dynamic, on-demand chain of trust that is continually reassessed at each access point. [emphasis by author]
Joe Payne, former MicroStrategy CMO is the current CEO of Code42, a company that utilizes zero trust strategies for organizational management. Code42 commissioned Forrester Consulting to research zero trust strategies on behalf of Code42. He also took Eloqua, an automated marketing software solution to an eventual buyout by Oracle.
Early Marketing Analytics with Facebook
MicroStrategy found itself near the birth of the online advertising analytics industry. Information analysis programs helped companies extract as much information as possible from users for marketing purposes. As early as 2011, MicroStrategy was creating products for user analysis. A 2011 press release introduces a product newly tailored to Facebook called Wisdom. Lets allow Saylor to explain the product:
Wisdom scans all of your Facebook friends’ posts, their events, and their likes, and presents them in a highly compact and organized format…Even better, Wisdom tells you what events, music, books, and movies are most popular among your friends, helping you learn from the wisdom and experience of your friend network
In 2012, MicroStrategy launched Professional Wisdom which builds on the previous application, but focuses on analytics for businesses. They identify use cases such as ‘psychographic’ analysis and comparison where, for example:
a sports equipment retailer can generate an Interest profile for males, between the ages of 18 and 45, who like Nike and Adidas, to determine what music they should be playing in their stores, what products they should be stocking, and what services they should be providing
In the comparison component they offer the ability to compare the various sub group data overlaps through “over 30” predefined consumer categories. These types of early data analytic tools, geared towards businesses and large organizations, helped form the modern social media-defined era of personally constructed advertisement targeting.
In 2013, MicroStrategy formally partnered with Facebook. Guy Bayes, President of business intelligence at Facebook, gave a presentation on the company’s partnership with MicroStrategy. In his own words, Bayes worked all over the industry and government before landing at Facebook. According to his presentation Facebook and MicroStrategy have worked together since relatively early days, but the relationship was geared more towards sales, finance, management and reporting rather than user data analytics. The formal partnership focuses on user data analytics.
In describing their collaboration, Bayes shows off how MicroStrategy was able to create a dashboard which aggregates everything possible about a person:
“You know everything about their demographics, where they live, what they like on Facebook…and this is due primarily to this collaborative risk taking adventure we went on with MicroStrategy”
Bayes goes on:
“We are 1% done with this, the plans we have for this environment are huge”
Looking back and hearing such blatant language, it is clear that neither Facebook or MicroStrategy had any concerns over public outcry or legal repercussions. Facebook clearly states they gather all possible information about you and that this represents one of their largest business opportunities. According to MicroStrategy, the partnership led to an upgrade of Facebook’s ability to process user data.. A decade later the basic issues surrounding these practices are as relevant as ever.
Tentacled Tech Mafia
Beyond MicroStrategy’s own contracts and relationships, a significant number of former employees started companies targeting various market niches. A former MicroStrategy employee named Christen Hearn wrote an extremely helpful article describing the notable tech companies ex-employees eventually spawned. Hearn himself describes the web as a tech mafia. Many of these companies headquarters also share the same city as MicroStrategy, Tysons, VA.
Sanju Bansal, the co-founder of MicroStrategy is Founder and Chairman of Hunch analytics, a company which focuses on healthcare analytics and consulting. Based in Arlington VA, the company is also led by the first CTO of the United States, Aneesh Chopr who was appointed by Barack Obama. Sanju sits on the board of several companies. The health care division of the Advisory Board Company, of which Sanju is a board member, was purchased for 1.3 billion dollars by Optum, which is owned by UnitedHealth Group, the largest insurance company in the United States as of 2021.
An early MicroStrategy employee, Sid Banerjee created Claraview, which provides consulting services for businesses and governments, and was acquired by NCR’s Teradata. A spin-off of Claraview, Clarabridge, is an AI based voice recognition and text generator generally analyzing call center data that was acquired by Provo Utah based Qualtrics. Several former MicroStrategy employees manage Clarabridge and Sanju Bansal sits on the board. Qualtrics, a company that ostensibly makes $750 million a year in revenue by providing fancy surveys, is building a 40,000 square-foot STEM focused daycare center. Co-founder Ryan Smith works with other tech elites in a multi-million-dollar program bringing computer science classes to every level of Utah’s education system.
Matt Calkins left MicroStrategy in 1999 as an employee to found the company Appian, but remained on the board until around 2014. The company, yet another “enterprise software” provider, contracts with the Army, Air Force, and DISA (defense information systems agency). Calkins leads Appian as CEO and Mark Lynch, the former CFO at MicroStrategy also left to become CFO at Appian. Appian’s headquarters are also located in Tyson VA.
In line with projecting his own perspective as progress, Saylor runs an educational non-profit called the Saylor Academy. This venture recently partnered with Edovo, which offers ‘free’ tablets for education and communication services in prisons. Edovo aims to disrupt the traditional abuse of prisoners’ families by the entrenched telecom services, with their own modern methods of harvesting the suffering of enslavement.
MicroStrategy spun off an internal unit Alarm.com in 2009 by selling the project to ABC capital for $27.7 million. Alarm.com offered an integrated security system and featured remote surveillance. Now a billion-dollar company, they offer whole suites of security related services. The company went public in 2017 and BlackRock also leads as its largest shareholder. Tysons, VA still serves as headquarters for alarm.com.
Militarized Software Attracts Militarized Minds
Why does one of the largest, historic “business intelligence” companies, which contracts for several major departments of the federal government, some of the largest companies in every industry, and countries all over the world, now own over 114,042 Bitcoin valued at over $5.5 billion dollars at current price levels. Whoever, whatever organization you are, a multi-billion-dollar position represents a major allocation of attention. Since Saylor controls MicroStrategy, his personal conviction about Bitcoin certainly explains much of the move, but the Big Tech ecology also shares the blockchain fervor.
As Bitcoin tends to do, those who fall down its rabbit hole fall hard. Regardless, Bitcoin and Saylor were a match made in heaven. The naitive digital money represents an idealized double entry accounting system where the state is always known. The transactional capacity, fixed supply and energy/computation based security hits all the sweet spots for a logically oriented mind. Bitcoin maintains military level security and prides itself on a militaristic mindset about the health and purpose of the protocol, tapping into Saylor’s upbringing and customer base ideologies.
Saylor maintains that going back to first principles money exists as socioeconomic energy which holds “The ability to compel members of the human race to do something”. Basing that energy on a digital network is obviously ideal for hosting such energy to a mind such as Saylor’s. It’s design philosophies also rhyme with Zero Trust Architecture, and even the marketing phrases use the terminology: Bitcoin, the ‘trustless’ data storing network…
Actions taken by the Federal Reserve and global monetary system also pushed Saylor to Bitcoin. Saylor often cites the intentional monetary inflation accelerated by central banks in 2020-2021, and the collapse of several sovereign currencies, such as the Lebanese pound or Argentine Peso. He argues no other asset acts as a better hedge in the modern age due to supply guarantees, digital portability and militarized network integrity. Saylor is also generally credited with convincing Elon Musk to purchase Bitcoin through Tesla.
According to their most recent annual report MicroStrategy is currently exploring branching into the blockchain data analytics space.
The “Unconfiscatable” Narrative
One of Saylor’s core arguments about Bitcoin revolves around the perceived ability of authorities to confiscate assets. Crossing borders with a private key certainly involves almost no risk compared with trying to bring physical assets such as gold through customs, but the idea that Bitcoin is “Unconfiscatable ” bears zero relation to historical fact or analysis.
In almost every existing cryptocurrency project to date, the only way to control the various units of account is by having the private key corresponding to the public address. The way to confiscate crypto is simply to confiscate the private key. Law enforcement agencies have a multitude of methods for finding such information, such as searching your house and devices. If you hide them well, or even memorize the mnemonic phrase, coercion or plea deals, would likely succeed. Alternatively, any motivated group (including law enforcement) knowing you own a significant amount of crypto, could simply tourture you for the whereabouts of your keys. These are the same problems with hoarding value that have existed forever. Calling Bitcoin unconfiscatable is foolish for someone with as big of a brain as Saylor.
In many ways Saylor’s and the technocrats’ arguments make perfect sense. They make perfect sense when you consider them in the context of a purely logical environment that views digital technology as the harbinger of truth. Taking a broader expansive perspective at deeper patterns with hierarchical influence on the topic of Bitcoin as a desirable global currency, we realize that hyper digitalization of the world revolves around a doctrine of separation which enables the abstraction of life.
Their logic goes as follows: since digital engineering is built on the basis of distrust (logic and math) and control, then you should trust digital technologies to run your lives because it’s guaranteed to perform a defined function.
The mathematical basis of digital technology comes from applying logic propositions to a binary number system tied to an electrical circuit. In order words on the machine level, digitization refers to a perspective created through permutations of two possible states TRUE or FALSE, 1 or 0. The physical structures underpinning this paradigm control the flow of electricity to interact with mechanisms that can only be TRUE (electrified) or FALSE (non electrified).
For any person of faith, a doctrine of separation from the creator (synonyms: natural world, spirit, seeking the mystery, giving/receiving love, oneness) leads to a world of illusion and falsity. Instead of attempting to banish illusion, we can avoid being consumed. Life exists because of patterns exacting some separation from the mystery or oneness, we cannot totally separate ourselves from illusion nor deny its connection to truth, only recognize its role and service to creation while seeking the higher.
Before blockchain, the capacities to financialize the digital universe securely did not exist, so the technocrats and oligarchy could not digitize society. The rapid exponential acceleration of technology leaves early stars such as MicroStrategy in the dust, while their philosophical legacy increasingly consumes the soul of the world.