2020-02-01 Forbes Asia

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FORBES ASIA FEBRUARY 20 20

The crusade cost him two directors, plus the confidence of his fa-

ther, who threatened to step down from the board because he be-

lieved his son was distracted from Overstock’s core business. The

litigation dragged on for over a decade and resulted in a handful of

settlements, including a $20 million payment from Merrill Lynch

in 2016. “I think he won the battle but lost the war when it came to

naked short-selling,” says Tom Forte, long the lone analyst covering

the stock. In the years Byrne spent chasing short-sellers, Overstock’s

stock sagged and revenue drifted upward, hitting $830 million in

2008, $1.3 billion in 2013 and $1.8 billion in 2018. And while the

company never lost as much as Amazon or Wayfair, as Byrne likes

to point out, its profitability has been modest. Overstock broke into

the black in 2009, then eked out small profits for the next seven of

eight years.

In 2017 and 2018, as Byrne shifted his attention to crypto and

blockchain, the company began bleeding red ink—$316 million over

two years— more than twice the profits Overstock ever delivered.

Byrne blamed declining market share on cash-rich competitors.

“The thing I never anticipated... was that I would be in an industry

that tolerated people losing $500 million, $1 billion or $3 billion

forever. We started drawing copycats, who came in and seemed to

have unlimited capital,” he says.

Former employees say Byrne was distracted. In 2004, the com-

pany spent a couple of million to develop an online auction platform

akin to eBay, but it struggled to make money and was shuttered in

2011. In 2014, Overstock invested $400,000 to facilitate pet adop-
      tions by working with shelters, which it still runs but describes as a
      “public service.” The company started selling home, auto and small
      business insurance in 2014, too, which Byrne described as “a long-
      term play” before trashing it three months later.

“Patrick gets very focused on something, and

then when he sees the financials didn’t work out, he

basically forces layoffs,” says Chad Huff, a former

Overstock software developer. “Initiatives would

get started, then shelved. Or they’d be half done

and not in a great state but rolled out anyway.”

couple of months before resigning,

Byrne sits down at Overstock’s new

headquarters—designed to look from

above like a peace sign—and rumi-

nates on his two decades running the

company. “It’s kind of imagination land,” says Byrne.

Overstock was long immune from activist share-

holder campaigns and boardroom coups, and what

ultimately prompted his sudden departure is still

murky. Investors had called for Byrne to step aside

as CEO and become chairman. Despite recent

stock sales, Byrne remained the company’s largest

shareholder at the time of his resignation, with a

14% stake, and says he wasn’t pushed out. “This

is not about pressure from shareholders. The only

pressure—or actual issue—was that the insurance

companies were having conniptions,” he says. (In

September, Byrne abruptly sold his entire stake.)

Byrne began chasing crypto in late 2013. Bit-

coin’s price had skyrocketed that year from about

$13 to more than $1,000, and in January 2014,

Overstock became the first major retailer to accept

bitcoin as payment.

A

IMAGINATION LAND

Under his leadership Overstock became

a petri dish for Byrne’s musings.

Here are some of the e-commerce

company’s wildest detours.

Tzero, which is seeking

to build a blockchain

version of Nasdaq.

Minds, a social

network that rewards

users with “tokens”

that can be spent on

the platform.

Bitt, which works with

central banks to issue

digital currency.

Spera, which helps

freelancers manage

projects and get paid.

Voatz, which al-

lows voters to cast

Creates a blockchain

investment arm

named Medici Ven-

tures. It starts or in-

vests in 19 blockchain

companies, including:

Partners with farmers

to sell local produce

online.

their ballots on the

blockchain via a

smartphone app.

GrainChain, which

tracks agricultural

commodities along

the supply chain.

Vinsent, which runs

an exchange for wine

futures.

Medici Land Gover-

nance, which is work-

ing to put property

records on the block-

chain in places like

Zambia and Rwanda.

2003

Launches a travel-

booking site, but it

loses money and is

sold for $17 million in

2007. In 2011, Byrne
      decides to get back
      into travel.

2008

Begins selling fore-

closed homes and

other real estate. Shuts

it down three years

later. In 2018, announc-

es plans to get back

into real estate, but it

has yet to happen.

2004

Spends several million

to launch an auction

platform. Shuts it

down in 2011.

2011

Begins offering car

and home insurance.

2005

Byrne embarks on

crusade against

naked short-selling.

Litigation stretches on

for over a decade.

2006

Starts selling cars.

Announces relaunch

in 2017, but site is

currently inaccessible.

2014

Launches a pet adop-

tion service. Still runs

it as a public service.

2018

Byrne becomes

enamored with

troubled three-wheel

car startup Elio

Motors, agrees to

invest $2.5 million.

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