Michael Saylor Analysis of COVID-19 Risks

Michael Saylor, the CEO and founder of Tysons technology firm MicroStrategy Inc., called social distancing measures enacted to limit the spread of the novel coronavirus “soul-stealing and debilitating” and stated the company would not close any of its offices around the world unless legally required to do so.

The statements came in the form of a lengthy email sent to all company employees Monday afternoon detailing his views on the current coronavirus crisis and scale of the country’s response (scroll down for the full text). The email’s contents were briefly posted on Reddit and shared with the Washington Business Journal, which has confirmed the message’s authenticity with MicroStrategy employees. The Reddit post was taken down within minutes.

The World Health Organization estimates the mortality rate at about 3.4% for the novel coronavirus. Centers for Disease Control and Prevention estimates the mortality range from 0.25% to 3%.

Fellow MicroStrategists,

The spread of the Coronavirus and attendant explosion in media coverage has resulted in a dizzying sequence of actions at the state, local, and federal levels in every country where we do business. Most of these relate to social distancing, quarantines, & travel restrictions. These political actions have driven a cascading set of economic actions by leaders across all segments of the worldwide economy that contract business activity. Of course, this has had a dramatic, stressful impact on all of us – no one is immune to the pain that is currently rippling around the globe.

If you are suffering from anxiety or uncertainty about the future, that is completely understandable. Snapping to full alert mode in times of crisis is an expected and healthy reaction and has served the human race well for millions of years. Although I have said nothing on this subject to date, I believe now is the time for me to let all of you know my thoughts on COVID-19 and the challenges that face us.

Before I share my thoughts, I want to invite all of you to review some of the data available on the web pertaining to mortality, viruses, epidemiology, and the history of the flu. The information available is both rich and fascinating. It will take you 30 minutes to browse thru it all, but I believe it is essential to our conversation to start with a rich array of facts. I think we can all agree that it is time well spent, given the importance of the decisions we need to make right now and the stress we are under.

My sincere request to each one of you is please take a moment to click on each of the links below and carefully consider all the information at hand before proceeding to my commentary at the end of this memo.

Mortality, Respiratory Infections, and COVID-19

Let’s start with the subject of mortality. Here Is an excellent overview of the causes of death around the world each year. The flu along with pneumonia are the primary causes of death from respiratory infections. It is difficult to know how many people are currently infected with COVID-19, or what the final mortality rate will be, or who will be most harmed. However, the Disease Burden of Influenza offers an interesting view of the true damage from a respiratory virus, taking advantage of the benefits that hindsight provides. As you will see from this article on the King of all Viruses – they are really difficult to stop from spreading, but they are also something the human race has learned to live with after millions of years of evolution. When we dig deeper into the risks from new strains of the flu virus, we begin to realize that this is not a new phenomena – there are new strains arriving from year to year, some worse than others, and old strains are weakening exponentially as new strains are strengthening. Vaccines are only partially effective, so while they are useful, they are only part of the solution.

Now, what do we know about the Corona virus? Not nearly as much as we know about Pneumonia (450 million cases per year worldwide) and the Flu (800 million cases per year worldwide). We have tested less than 1 million people in the entire world, less than 320,000 in China (they stopped testing/reporting Feb 24) and 13,624 in the United States as of March 12. This represents an exceedingly small fraction of the world population. Approximately .02% of China, .004% of the United States, and .14% of Italy. Worldwide less than .01%. It is hard to know what will happen over time, but all the data we have so far on the mortality in China and Italy indicate the virus is particularly dangerous to the elderly in poor health. This is very similar to the flu.

We have the smartest, best educated professionals in the world. I invite all of you to carefully consider this matter and come to your own conclusions My thoughts follow, but I am not telling you this to try to convince you. I just think that as part of our team, you all deserve to know where I stand on this matter.

My Analysis of COVID-19 and the World’s Response

We have a new strain of severe respiratory virus spreading around the world – similar to the flu – that threatens the elderly in poor health. So far 168,000 cases have been confirmed and 6600 have died. The world is appalled at the case mortality rate of 3.8%. The response has been to embrace techniques like social distancing, self-quarantine, and economic hibernation in an attempt to slow down the spread of the virus. Many people are now afraid they may catch the virus, spread the virus, and suffer some awful health outcome.

There are some assumptions that have been made over and over again, mostly unchallenged:

1. The disease has a 2-4% mortality rate.

2. The disease represents a threat to the public health.

3. The disease must be stopped at all costs.

Although those making these assertions are well meaning and believe they are doing the right thing, there is strong reason to doubt any of the above three premises are correct. Let’s consider them one at a time:

What is the actual Mortality Rate?

The actual mortality rate of COVID-19 is certainly less than the initially reported case mortality rate by a large factor. We have 100 years of experience with the flu, and much more data to understand what really goes on when a respiratory virus spreads thru the population. Considering the tables here we notice that in a single year (2017) in the United States, 45 million were infected, 21 million visited a doctor, 810,000 were hospitalized, and 61,000 died. If we just tested those sick enough to be hospitalized, we might announce a Case Mortality of 7.5%. That falls to .29% if we divided by those that make a medical visit. The actual mortality rate falls to .13% if we test the entire population (or properly sample a significant portion and scale the results up).

The proper number comes from considering the entire population of the country – in that year 14% of the country was infected. For each person hospitalized, there were 55 people infected. The danger is two orders of magnitude less for those with a strong immune system, so many of them don’t know they have the virus. Others attribute their symptoms to the common cold, allergy, or something else. If we applied similar ratios to the China results for COVID 19, then the mortality rate would fall to .07%.

We have a classic case of a statistically insignificant sample further marred by adverse selection. Only the seriously ill would ever be diagnosed, therefore the case mortality rate is being calculated as (deaths/severely ill) instead of (deaths/infected). Of course, the most important ratio would be the number of who died from COVID-19 divided by the number of people in China (deaths/population). That works out to be .00023 %. The Black Death killed 30-60% of everyone in Europe. COVID-19 has killed .00023% of China.

Is COVID-19 a threat to public health?

As this chart illustrates, we experience in the vicinity of (at least) 54 million deaths per year worldwide. 17.7 million from cardiovascular disease, 9.5 million from cancer, 5.4 million from respiratory disease/infection. COVID-19 is responsible for 6654 deaths so far. This represents .12% of the respiratory category and .01% of all deaths. If actual mortality was 10x the rate we observed in China, we would see 180,000 deaths worldwide, or 3% potential increase in respiratory disease mortality, and .3% potential increase in overall mortality. I say “potential”, because as the new virus is spreading exponentially, the old virus strains are falling off exponentially because of the spread of immunity throughout the human population. For any new disease to be a serious threat to public health, it would have to kill millions per year, who would otherwise not have died.

We have 7.8 billion on the planet with a life expectancy of 73. Simple division suggests that 292,000 people per day should be dying daily in steady state. We only manage to account for a fraction of the total when we attempt to codify every death, along with precise information regarding the individual, circumstance, and cause. COVID-19 mortality rates need to reach a reasonable percentage of this number to start representing a real public health threat. 6571 over a 10 week timeframe represents 93 per day, or .03% of human mortality.

The principle rationale for presuming COVID-19 is a health threat is the 10x greater mortality rate than the flu. Most people seem to agree that “if this is just another strain of a flu-like virus, with similar characteristics (attacks the elderly & immune compromised, with overall mortality rate of .1%) then we can go back to life as usual”. There are some strong reasons to believe that the actual mortality rate is closer to a bad flu virus:

1. The disease passed thru China, a country of 1.3 billion people, with only 3000 deaths.

2. There are not enough deaths in the other countries to support a 10x thesis.

3. All statistics to date suffer from adverse selection in favor of the elderly, sick, and immune compromised.

4. The average age of COVID-19 deaths in China, Italy, & US appears to equal the average life expectancy

China has dropped their extreme measures and returned to business as usual. If the virus was extra- lethal, there should be tens of millions of cases and hundreds of thousands of deaths… growing toward millions of deaths. If the largest country in the world is able to operate normally right now, original estimates were way too harsh.

When a new disease kills an otherwise healthy 20 year old, it robs them of 60 years of life. This is a public health crisis. When that same disease kills an unhealthy 85 year old that suffers from cancer, it might have merely replaced flu or pneumonia as the pathogen that resulted in death. That person might die exactly when they would have died had the virus not mutated. For each new strain, there is a decaying strain that is less effective. There are many pathogens that prey on the elderly and sick – pneumonia strikes many seniors and it consists of a mix of viral and bacterial pathogens. The 85 year old cancer patient might pass 2 weeks before the next virus would have taken them. Dying 60 years early solely due to a virus has a far greater impact on the public health than dying weeks or months early at the end of a natural life.

Thus, metrics like # infections and mortality rate are not the signals to focus upon. A more rational metric would be Loss of Life. A virus with a .1% mortality rate that impacts healthy 10 year olds with 70 years left to live (Loss of Life per 1000 = 70 years) is 10x worse than a virus with a 1% mortality rate that impacts sick 80 year olds with 8 months to live. (Loss of Life per 1000 = 7 years)

It seems difficult to support the negative thesis in the absence of millions of deaths and a large number of deaths in the age range of 0-60. The flu pandemic of 1920 produced millions of deaths and killed healthy individuals in their 20s. We are not seeing that here. There is undoubtedly stress on the medical system and a tragedy for the senior population, but no reason to believe it is risky for otherwise healthy people to go to work, school, or live our lives.

Must the disease be stopped at all costs?

Policies like social distancing, curfews, quarantines, and travel restrictions are wreaking havoc in our society and are iatrogenic (“the cure is worse than the disease”). If we were dealing with something like the Black Plague, expecting the death of 25% of the healthy adult population, it might make sense to consider harsh measures. As I have discussed above, this virus has not proven itself to be anything more than a new flu-like strain that looks to be less lethal than every major source of mortality that we have managed to measure. Drowning, Accidents, Drug Overdose, Fire, Conflict, all look to be more deleterious to our health.

Eventually, it will spread to hundreds of millions of people. 99.9% will develop natural immunity (that is what human being have been doing to combat viruses for millions of years) and life will go on. We can attempt to slow it down or stop the spread, but this will be no more successful than stopping the common cold. We can’t hold our breath forever – eventually we will pass out. The Chinese have figured this out – eventually the West will come to its senses.

The current policies represent a threat to our civil liberties, economic liberties, & physical/mental health that far exceeds the theoretical benefit of slowing down a virus. They will bankrupt small and large businesses, eliminate jobs, destroy assets, impoverish multitudes. If our interest is the public health, then depriving the entire population of education, jobs, sports, recreation, entertainment, assets, exercise, bars, restaurants, museums, religious ceremony, group celebrations is certainly unhealthy to them.

The bigger danger is the economic damage we are going to do to ourselves if we shut down production for a long period of time. Certain businesses, once stopped, can’t be restarted. Certain customers once lost, can never be regained. Like cutting off blood flow to vital tissues – if this goes on too long, the tissue dies. Death comes in 3 minutes without air, 3 days without water, 3 months without food. It is reasonable to assume that the anxiety inflicted upon a billion people who suffer from the curfew, quarantine, social distancing, loss of job, loss of assets is going to do much more biological damage than the virus. Take away someone’s freedom, friends, music, entertainment, sports, celebrations, and passions and what is there to live for? Most of the other causes of death are going to get a boost from a prolonged economic shutdown. Hopefully our leaders will realize this soon and reverse their course of action before they do any more damage to our collective health & prosperity.

A rational strategy to a lethal virus that tends to kill senior citizens with weak immune systems would be to avoid exposing them to large crowds and discourage them from mixing with lots of people that might be carriers. Don’t take the entire classroom of kids to see your grandmother in the nursing home – common sense. Worrying about a group of 16 year olds playing soccer during the flu season seems pretty foolish. Instead of quarantining 800 million healthy & productive people and stopping their work & education, we should quarantine the 40 million elderly retired, immune compromised people who no longer need to work or get educated, and rely on the 800 million to support them and provide them a joyful reason to live.

Our Corporate Obligations to Society

Even though many have embraced Social Distancing, at MicroStrategy we are going to stay open for business. We are an essential service to society and our customers depend upon us. Remember the Golden Rule – “Do unto others as you would have them do unto you”. How would you feel if the hospitals, phone networks, power plant, grocery stores, fire departments, jails, and transportation networks all shut down?

It would be easy to be spooked by the wall of negative news on this virus, but if you study the charts and think hard about the statistics, you will come to the conclusion that the odds of dying from COVID-19 for a healthy adult vs. an unhealthy senior citizen are not that different than the odds of dying from ANYTHING for a healthy adult vs. an unhealthy senior citizen. We cannot let this development cripple our firm.

Many of our customers are on the front lines of the COVID-19 crisis. You know who they are – they are struggling to reroute the supply chains, deliver the medical supplies, handle the financial chaos, keep the communication and transportation networks operating, and accommodate the billions of people whose lives have been turned upside down. They need our help. They deserve to get it. Now is the time to run toward the crisis, not away from it.

I expect we will keep our offices open everywhere in the world unless legally directed to close them by local authorities. If we wish to maintain our productivity, we need to continue working in these offices. We have prepared our employees to be able to work from anywhere, but unless you are feeling ill, suffering from anxiety, or have a family emergency, I would prefer that you come to the office to work. Regardless of what cards we get dealt by local governments, customers, or circumstances, we must strive to maximize productivity in any way we can so that we come out of this crisis strong enough to serve our customers, employees, partners, investors, and community at large.

Final Thoughts & Philosophical Note

When it is all said and done, this virus will have taken 25,000 lives or 25 million lives. I have already pointed out why I believe we are likely to be on the low end of this range, and the actual loss of life will be lower than the mortality count implies, due to the skewing of the disease to the unhealthy senior population. The world has become a bit mad in the last month, but there is no reason we all need to be overwhelmed by the madness of the crowd. We are free individuals and we can think for ourselves.

It is soul-stealing and debilliating to embrace the notion of social distancing & economic hibernation. In the absolutely worse case, the overall life expectancy worldwide would click down by a few weeks. Instead of 79.60 years to live we would have 79.45 years to live. 1 out of 500 people will pass on a bit sooner, or not, or die from a celebrated disease instead of just old age. This is no reason to surrender everything we hold dear and everything our parents fought for. Previous generations made extreme, heartbreaking sacrifices to create a better world for all of us. We owe them something. We should continue to do our work, serve our customers, educate our children, cultivate our health, pursue our hobbies, worship our gods, enjoy our sports, cherish our friends, listen to our music, eat, drink, & be merry. Live your life.