Embracing Bitcoin in Corporate Treasuries: Insights from a CEO Leading the Charge

(0:00) Welcome back to Bitcoin Treasuries. (0:03) I’m Tim Kotzmann. (0:05) I’m joined today by Fong Lee, the President and Chief Executive Officer of Strategy, the world’s largest Bitcoin treasury company.

(0:14) Fong, great to see you. (0:16) And thank you for the time and the opportunity.

(0:18) Well, it’s good to have you, Tim. (0:19) And thank you for everything you’ve done for Bitcoin, everything you did for MicroStrategy and everything you’re doing now for Strategy.

(0:28) It’s been a lot of fun. (0:30) It’s been a great learning experience. (0:32) By way of background, you’ve served as President and Chief Executive Officer since August of 2022.

(0:40) And you previously served in various senior executive positions here, including President and Chief Financial Officer, Senior Executive Vice President, Chief Operating Officer, and Chief Financial Officer since joining Strategy in August of 2015. (0:54) Does that sound right?

(0:55) Yeah, I’ve done a little bit of everything. (0:56) Okay. (0:57) The short of it is in the last 10 years, I joined Strategy as a CFO in 2015, took on some additional responsibilities working right alongside Mike.

(1:11) Obviously in 2020, when we embarked on our Bitcoin journey, I was the CFO at that point in time, Mike was the CEO. (1:20) And in 2022, we decided that it’s best that he spend the vast majority of his time on Bitcoin, which I think we’re all glad we did as the Executive Director. (1:31) And I would run the business day to day, both our Bitcoin business and our software business.

(1:37) And that’s what I do today. (1:38) I spend probably half of my time working on our enterprise analytics and AI software business, which is a lot of fun. (1:48) We have about 4,000 customers all across very large enterprises, name brand companies, who enjoy our software.

(1:56) We’re pivoting that more and more to AI. (1:59) And then obviously, I think the folks who are listening to this, and you know very well what we’ve done on the Bitcoin side. (2:07) And if you were to ask me if I knew that this is what I was getting into in 2015, and I told you, yes, I’d be lying.

(2:15) But I think I have the best job in the world, right? (2:17) Running a company that intersects in the two most important technologies of the century. (2:24) I was going to say arguably, but I don’t think it’s arguably.

(2:28) I think they are the two most important technologies of the century, AI and Bitcoin. (2:36) So how much more fun could you have?

(2:39) Absolutely. (2:40) You’ve also served as a member of the board of directors of strategy since August of 2022. (2:47) Can you talk a little bit about that and how the executive team and the board works together?

(2:53) Yeah. (2:53) So as part of me taking on the responsibility of CEO and president, I joined the board in 2022. (3:00) But I’ve been close with the board when I joined 2015.

(3:05) And I talked to a lot of companies, quite a few, many more than have adopted a Bitcoin treasury policy, who’ve added Bitcoin to their balance sheet. (3:16) I’ve probably talked to three, four, five dozen companies that have seriously thought about putting Bitcoin on their balance sheet since we started this journey in 2020. (3:28) And by and large, the biggest barrier to moving forward with putting Bitcoin on their balance sheet is not the CEO.

(3:36) It’s not the CFO. (3:38) The biggest barrier, and maybe rightfully so for corporate governance purposes, is the board. (3:44) And to put Bitcoin on a public company’s balance sheet, it means you have to change the investment policy.

(3:52) And the investment policy is governed by the board of directors. (3:56) So you need the board to vote for a change in the investment policy. (4:00) And if you don’t have a supportive board, and many don’t, right?

(4:04) If you look at an average public company, it probably has eight to 10 members on their board, purposefully diverse in terms of background. (4:12) And usually there’s someone on the board who’s extremely conservative, who doesn’t want to take the time, the thousand hours, whatever it is, to learn Bitcoin. (4:21) And immediately, their immediate reaction is one that I think has changed a lot in the last four years, but one that you still hear, the typical tropes.

(4:29) And so you have to get over that. (4:31) We have had the good fortune that we have a board at that point in time in 2020, because we’re a control company, it was a smaller board of folks who understand finance extremely well, understand software extremely well, and understand the public markets really well. (4:49) All of them were willing to go down the Bitcoin rabbit hole, were willing to spend the thousand hours, understood the pros and cons of going down this path.

(4:58) And their history with the company, many of them have been here a long time, is to support the innovation and the trailblazing we’ve done. (5:08) Since then, we’ve actually added three more members to the board at the beginning of this year, all of which are very supportive of the strategy and are extremely well-known in their fields. (5:18) So having the right board is extremely important.

(5:23) And ultimately, everybody’s goal here is to create shareholder value. (5:26) And I think we’ve proven we’ve been able to do that.

(5:29) Absolutely. (5:30) We’re sitting in the strategy headquarters in Tyson in the DC area, but you have offices and operations internationally as well. (5:39) Can you walk us through those locations and operations as well as the current headcount?

(5:44) Yeah, we have field operations. (5:46) And I think at this point in time, it’s about 27 cities.(5:50) And think of all the major cities around the world, right?

(5:54) New York City and here at our headquarters, Toronto and Canada, London, Paris, Madrid, Warsaw is a major center for us. (6:06) In Asia, we have offices in Seoul, in Tokyo, in Sydney, in Singapore, in Hangzhou, China, which is a major development center for us, in Pune, India, in Dubai, South Africa, in Sao Paulo, Buenos Aires, and Mexico City. (6:25) So we have offices all across the world serving those 4,000 customers or so.

(6:31) Our main development centers, if you will, are in Hangzhou, China, where we have a large team of engineers. (6:39) In Warsaw, Poland, we have basically a sort of our HQ2. (6:45) And more recently, Buenos Aires, Argentina, and Pune, India, we have some development staff too.

(6:51) But it’s a very international company. (6:53) About 60% of our revenue is in North America, 40% international, which makes it a lot of fun.

(6:58) Strategy is known today as a Bitcoin treasury company. (7:03) But if we wind the clock back, Strategy as a business intelligence company has quite the history of spearheading innovation.(7:11) You offered analytics in the web, browser-based analytics in 1998.

(7:16) You were the first to do that. (7:18) You were the first to offer analytics on mobile devices in 2008. (7:22) You were one of the first in the cloud in 2012, the first to offer integrated AI capabilities in 2023.

(7:29) So Strategy, by all accounts, appears to be constantly pushing the edge of technology and innovation. (7:34) Can you tell us about the present day operation on the operation side, as opposed to the Bitcoin side, the BI and analytics front?

(7:43) Yeah. (7:43) As much as I love talking about Bitcoin, I equally love talking about BI. (7:50) We, you know, if you take the last four years and what we’ve done in the Bitcoin space, I would argue in the last 35 years, we’ve done something similar in the analytics space.

(8:04) And for those who aren’t super familiar, right, we offer what we call enterprise analytics.(8:10) Some call it business intelligence to corporations. (8:12) What does that mean?

(8:13) Large companies around the are using our platform to take data, typically sitting in something like a data warehouse. (8:22) Think, right, like, you know, it used to be like a Teradata and a Teza. (8:25) Now it’s Snowflake or Databricks or whatever.

(8:29) And we’re surfacing that information. (8:31) We’re letting business users interpret that information and provide it to their end users, right? (8:36) So if you were to…

(8:37) Retail is a big sector for us, right? (8:39) If you were to walk into, let’s say a Starbucks today, baristas and the managers behind the desk are looking at strategy reports on a daily basis to see how they’re performing, right? (8:51) That’s just an example, right, of what we do.

(8:54) And there are many examples, large banking, financial institutions, et cetera. (8:59) I state all that as a backdrop, we invented this space. (9:03) And by we, I wasn’t here.

(9:05) In fact, I was a user of MicroStrategy at that point in time, but Michael Saylor, our founder and executive chairman, literally invented the BI space as you know it today. (9:16) And so imagine all of these podcasts and interviews that you’re seeing Michael Saylor doing about Bitcoin. (9:22) He was doing that about analytics in the 1990s, right?

(9:25) And the company saw significant growth and significant increases in valuation and significant appreciation of stock price by being one of the internet darlings, if you will, the .com darlings in the late 1990s, because we invented that space. (9:42) You open your mobile phone today and inevitably some of your apps have charts, graphs, analytics on there. (9:49) We created that.

(9:50) We were the first to really provide B2B analytics. (9:53) In fact, we were the first ever enterprise application for the iPad, right? (9:59) We worked with Apple and released MicroStrategy on the iPad.

(10:03) And if you think about today, you walk into a retail store and you pay for something on Square and they turn the iPad screen around and there’s a Square app and you begrudgingly put a tip in there for your coffee and then you sign it and all these kinds of things. (10:20) I’m trying not to make a joke about what amount of tip for the water. (10:22) Yeah.

(10:22) Well, you can make us, we started, we were the first enterprise application on the iPad.(10:27) And I think that was 2009 or 2010. (10:30) Now we’re in the cloud.

(10:31) And I’ll say I started my career as a software engineer. (10:36) Essentially, I had an engineering undergrad. (10:38) I’ve always been a tinkerer, a technologist.

(10:41) And I joined MicroStrategy in 2015 because I thought it was the best analytics technology out there. (10:49) I’d used it for 20 years prior to that. (10:52) And I thought it was awesome.

(10:54) And so if people are like, so what is a software company doing in Bitcoin? (11:00) I would argue it’s actually quite consistent, right? (11:03) We invented our way into analytics.

(11:06) We invented solutions for large companies to provide data to their end users within their corporation and to end customers outside. (11:15) We invented that because there was a need.(11:17) Well, in 2020, when we had an issue with interest rates and our short-term T-bills that we had invested in with rates going from 225 basis points to zero, and we saw inflation coming in and whether it be 15, 20%, a debasement of the US dollar, we invented our way into a solution to that.

(11:41) And of course, the solution already existed. (11:44) It was Bitcoin, but we invented the concept of a publicly traded company putting Bitcoin on their balance sheet and making it their primary treasury reserve asset. (11:55) So if you look at the last 35 years of the company, we have a history of every five to 10 years inventing something that, in my opinion, changes the market, changes the world.

(12:07) And it’s a pretty cool thing working at a company, being a leader in a company that just invents things. (12:15) We find a problem, we innovate it, we invent it, right? (12:17) And of course, that’s the hallmark in the background of what everyone knows Michael Saylor for.

(12:23) But the 1,500 employees we have in the company, they’re here because we invent things.(12:28) And we have engineers, software engineers who every single day are coming in and working their butts off to invent new things because they want to work for a company that creates new product, creates new things. (12:40) And now with Bitcoin as the latest innovation, what’s really interesting is you asked about our folks, we have 1,500 folks who probably, not every single one of them, but the vast majority of them walk in with an extra hop in their step every single day.

(12:58) Because yeah, sure, maybe they’re creating software, inventing software, selling software, servicing software, et cetera. (13:05) But they’re also part of a company that they know that is innovating in now not just the enterprise software and analytics market and AI market, but we’re innovating and we’re inventing things in the financial markets. (13:19) So it’s a ton of fun.

(13:20) I mean, people are just having a great time here. (13:24) And then we’ve done a rebrand, so that makes it even more exciting. (13:28) We’re an innovation company in the most pure definition of the word.

(13:36) Sometimes you hear software companies, sometimes you hear folks in the Bitcoin space say we’re innovators. (13:42) And we went through our corporate values recently and we were going to put innovative. (13:50) And then we looked at all of the tech companies within our space that are our peers, and 80% of them had innovation as a corporate value.

(14:01) And I said, well, we’re not going to use innovation then because we’re not going to do the same thing everyone else. (14:04) We chose the word bold. (14:06) But I would argue 80% of the technology companies that have innovation as their corporate value, they’re not really true innovators.

(14:14) They’re just following along. (14:15) They’re just sort of going through the steps of what they think is innovation. (14:19) We innovate, we invent.

(14:21) And it starts with our founder. (14:23) That’s core to what he believes. (14:25) Continues with me.

(14:26) That’s core to what I believe. (14:28) Innovate in the space of technology and now finance too.

(14:31) It reminds me of entrepreneurs and intrapreneurs with an intrapreneur being an entrepreneur that’s kind of being, not to use the word innovative again, but inside of a company.(14:43) Do you think that’s a fair characterization of some of the engineers and some of the folks here that are, I mean, if you’re innovating, then I guess you’d have intrapreneurs kind of on staff as part of the projects.

(14:59) I wake up every morning trying to figure out how I can disrupt some decision that I made five years ago, or that Mike made six years ago, or that somebody in the company made two weeks ago. (15:11) And it’s not for everybody. (15:13) You ask some of the folks here that you either love it or you hate it.

(15:17) The culture of strategy is either you love it or you hate it. (15:20) There’s not a lot in between. (15:22) Because you have to know that whatever you decided four weeks ago, or four months ago, or four years ago is ripe to be disrupted.

(15:31) That’s the nature of innovation and being an entrepreneur. (15:33) And it’s risk taking, but it’s questioning every single day, the principle with which you made a decision yesterday. (15:43) And so yes, to work in this company, to fit in our culture, you have to be an intrapreneur, to use your words, right?

(15:52) Like every single day. (15:55) We’re doing something in the performance review process right now, which I’m particularly excited about that scares off our HR and legal team a little bit.(16:06) And if you do something that you know is pushing people in certain corporate departments, you know you’re on to something good.

(16:13) The less innovative thing we did is we decided to use AI, our internal AI LLM. (16:21) In this case, we use ChatGPT at this point in time. (16:24) And I said, one of our challenges is that we don’t really provide people as good feedback as we’d like to on their performance.

(16:32) And this happens all the time in most organizations, right? (16:35) Especially more junior managers who are learning to manage, or rather be a friend of their employee than their manager, right? (16:42) I like to use the word coach, because the analogy that I always give is if you’re coaching a team, your expectation with the player, the athlete, is you’re going to push them to do something that they never thought possible that day, right?

(16:57) And then the next day, you’re going to push them to do something that they never thought possible, right? (17:01) If you’re running 100 meter dash in 12 seconds, you’re going to push them to do it in 11, and then 10, and 9.8. And they’re going to throw up the end of practice, and they’re going to look to you, and they’re going to say, thank you. (17:12) Thank you for pushing me so hard.

(17:14) That should be the relationship between a manager and employee. (17:18) It’s not about going and getting beers after work. (17:20) It’s not about being your best friend, asking about your family, although you want to have the empathy and understanding.

(17:25) You want to push that person to do the most they have ever been able to do in their craft, and they will thank you for making them a better individual and a better employee. (17:35) But that’s inherently not the typical relationship, even in a software company, between a manager and employee. (17:41) And so how do we improve upon that?

(17:43) We use AI to look at the written performance review and give people feedback and improve their performance review. (17:49) Not that revolutionary. (17:51) Step number two that we’re going to do now is, OK, you wrote down what you thought about the person, how they can do better, what things that they’ve done they can continue to do.

(18:01) Well, then the next step is, how do you make sure that conversation occurs? (18:06) The conversation you and I are having, this is being recorded. (18:09) Everyone’s going to get to watch it.

(18:10) We know this conversation occurred. (18:12) How do I make sure the conversation between the manager and the employee took place and was done well? (18:18) And so what are we going to do?

(18:20) Back to the sports analogy, we’re going to film it, and we’re going to provide feedback.(18:24) After an athlete runs the 100-yard dash, what do you do? (18:29) You record it, and then you watch it back with the athlete and say, these are the things I noticed that you did that you could do better.

(18:36) These are the things you can’t do better. (18:37) So we’re going to record the performance conversation. (18:40) We’re going to have AI review the performance conversation and say, manager, these are the things you could have done better.

(18:47) And so I did it as a guinea pig. (18:49) And as you can probably, not unexpectedly, but a blind spot for me, the AI came back and said, Fong, you did a great job providing the feedback, positive, negative summary, but you didn’t give the person a chance to say anything about what they’re going to do. (19:04) You didn’t ask the employee, OK, so based off of that, what are you committing to do?

(19:09) Excellent feedback that the AI gave me. (19:11) And so we’re going to do that with all of our performance conversations. (19:14) And I give that example, if you’re an intrapreneur, you should be comfortable with those things.

(19:19) You should be comfortable with the fact that you’re going to record the conversation between the employee and the manager, and the AI is going to be able to provide excellent feedback. (19:28) So that’s just an example of how we continue to innovate internally, not just with our technology and not just with Bitcoin, but in how we’re working with employees and how we’re going to improve the output of each and every one of the 1500 people working here.

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(20:44) Strategies kind of termed this phrase, volatility is vitality. (20:51) And Strategies journey as a Bitcoin development company, and then iterated to a Bitcoin treasury company, as you’ve said, has been well-documented. (21:01) In fact, this August will be half a decade of the Bitcoin treasury strategy.

(21:07) What did you learn from the last crypto winter, and how does that price drawdown inform your strategy for the next crypto winter? (21:18) Like what’s your thought process and approach for next year, for 2026, when a Bitcoin drawdown occurs?

(21:26) Yeah. (21:28) You see all these sort of terms and means, and like diamond hands was one of them. (21:34) You don’t know diamond hands until you just go through a Bitcoin winter.

(21:39) But I’ll start with probably the most important thing I learned. (21:43) And I learned a lot of things from Mike throughout the last decade. (21:47) And I’m extremely thankful for that opportunity, is having conviction.

(21:53) And Mike is many things as a founder, as a chairman, as a former CEO, as a mentor, and as an excellent spokesperson for Bitcoin. (22:10) I would say one of the biggest things is his conviction. (22:14) And how do you get conviction?

(22:16) You get conviction by doing first principles, understanding and analysis of the things that are critical and sort of within your sphere of what you’re working on. (22:29) And so Bitcoin is one of those things. (22:32) I still remember the first conversation I had with Mike on Bitcoin.

(22:36) I think it was March of 2020, right next door to this office, maybe it was April. (22:41) And he said, I have an idea for you. (22:44) He said, you’re going to think I’m crazy, but I really, really want you to think about it.

(22:49) And rather than immediately react, I want you to go off and do some homework. (22:55) And as you can imagine, in March of 2020, the amount of content to do homework on Bitcoin is not what it is now. (23:03) But I went and read the white paper, I watched a bunch of YouTube videos, and I listened to a bunch of podcasts, which there weren’t that many.

(23:12) And I tried to read as much research, good research on the topics that I could. (23:16) In fact, we tried to go and find, you know, bulge bracket bank research, which there was like one dude who was willing to talk to us on the record about the topic. (23:26) But, you know, I went down the rabbit hole along with Mike.

(23:29) At the same time, he would send me stuff to look at, I’d look at it, I’d send him stuff to look at. (23:33) And over the course of a couple of weeks, I don’t know that I got through a thousand hours worth of content, but I got through a lot of content. (23:40) And by doing the first principles analysis of how Bitcoin works, you start to develop conviction, right?

(23:48) And by understanding exactly how Bitcoin works from a technology perspective, why it’s important from a financial perspective, understand the cryptography associated with Bitcoin, understanding sort of all the details, right? (24:01) Setting up a node here, all those kinds of things, you have to do the work yourself. (24:08) And then when you do the work and you spend whatever it is, a thousand hours and you get conviction and you know it’s the right decision, then the next step is to go all in, right?

(24:18) And, you know, you’ve heard my talk about this and I’m a big believer in it too, right? (24:23) Like when you have conviction and you know something is the right decision, you don’t sort of hedge and go half Z’s, right? (24:31) You don’t sort of say it’s 5% of my portfolio or 10% of my portfolio.

(24:36) You say it should be 80, 90, right? (24:38) Maybe even 100% of portfolio. (24:41) And so if you do your first principles analysis, you go through, do the research, right?

(24:48) If you understand the underlying technology, right? (24:51) And then you develop conviction that you’ve made the right decision. (24:55) And then you go all in on the decision.

(24:57) Then when a crypto winter comes around, there’s no sort of, hey, there’s a drawdown on Bitcoin. (25:03) It goes from 67,000 down to 16,000. (25:08) Strategy value, which at that point in time, our stock in 2020 had a low of 90.

(25:14) We got into Bitcoin at around 125. (25:17) Our stock surged up to 1300 and then came right back down and during crypto winter down to sort of about 150, 140, right? (25:25) That is not the time to go back and say, oh, I did all this analysis.

(25:31) I went through a first principles research. (25:33) I became convicted. (25:35) I was wrong, right?

(25:37) It’s hard to say. (25:38) It’s easy to say you’re wrong if you’re not sure. (25:41) It’s hard to say you’re wrong if you’re sure.

(25:45) I’m pretty darn sure about Bitcoin. (25:47) So when you go through a crypto winter, but you’re sure that you made the right decision, you can feel steadfast that you made the right decision. (25:55) Happens all the time in organizations, right?

(25:58) The role of the CEO, the role of the chairman are quite important because every single day some employee, right? (26:06) Which you want those employees to ask you the question, are you sure? (26:09) You want them to challenge you.

(26:10) Just like I challenge folks and we innovate and we challenge the bankers and the lawyers and everybody we work with all throughout the Bitcoin ecosystem. (26:19) We challenge our partners and you want people to challenge you, right? (26:22) So you don’t want to create an environment where people aren’t challenging, but you also want to have such great conviction that when you’re challenged, you say, yeah, I understand what you’re saying.

(26:32) Thank you for the input. (26:33) But now let me explain to you why we’re going to keep doing what we’re going to keep doing. (26:38) And so if you can build that conviction, right?

(26:41) Then you can go through a 2022 and you can come out the other end, having had an understanding of the decisions you’re making and feeling good about them. (26:51) And that’s true with Bitcoin. (26:52) That’s true with software.

(26:55) I’d say it’s true with life in general. (26:58) And look, Mike’s been through and I’ve been through failures, wrong decisions. (27:06) And I think what makes the company strategies special compared to a lot of others who are trying to do something similar in the Bitcoin space, failures, mistakes, et cetera, are things that you can learn from.

(27:20) And when you’ve done something tremendously wrong, you have even more conviction the next time you do something that you’ve learned from those mistakes that what you’re doing is tremendously right. (27:31) And I think Mike brings that to the table. (27:34) I think he and I would agree he’s made more big mistakes than I’ve made.

(27:38) Right? (27:39) Which is more important in that he’s learned more from those mistakes than I have. (27:46) Right?

(27:46) And so look, and obviously having a track record of success now almost half a decade in, I hadn’t thought about that. (27:53) Half a decade is a long time, five years. (27:56) We’ve seen Bitcoin go up.

(27:58) We’ve seen it go down. (27:59) We’ve seen it come up again. (28:00) Right?

(28:01) And I think for those who are just now discovering Bitcoin and just now discovering strategy, as we sit here in the beginning of 2025, I follow X, I follow a lot of folks that are like, I got in at the top in November of 20, November of 2024. (28:17) Oh my goodness. (28:18) This is like, no, this is not the worst thing.

(28:21) Have some conviction. (28:22) If you got in for the right reasons into strategy in November of 2024, or Bitcoin for that matter, go back to those reasons and make sure that if those reasons haven’t changed, stay the course, have conviction. (28:35) That’s what I’ve learned.

(28:37) If you could choose the narrative right now for Bitcoin, what would it be? (28:42) I mean, you hear many things in the market. (28:45) You hear that Bitcoin is return additive.

(28:48) You hear that in some cases it’s a hedge against shorts. (28:52) Matt Cole, CEO of Strive recently told me that Bitcoin in your treasury is the best way to guarantee you won’t go out of business. (29:01) I think he said that to some CEOs.

(29:04) What themes do you see in your conversations around Bitcoin for corporations these days? (29:11) Is there one narrative or a simple explanation that you think is most fitting to this moment?

(29:17) I’ll start with Bitcoin as a technological solution to a financial problem that has existed in the universe, or at least on earth. (29:29) I don’t know about the universe, I guess, on earth for the last 3000 years. (29:35) It took 3000 years for all the elements of technology, distributed computing is probably the most recent one, to allow this invention to occur.

(29:54) First and foremost, it’s a technological solution to a financial problem.