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FEATURESFORBES ASIA FEBRUARY 20 20Byrne is vague about why he is in the nation’s capital and mentions
a meeting with representatives from Africa about his blockchain proj-
ects. He later reveals that he had been meeting with the Department
of Justice. Byrne claims he’s been serving as a government informant,
feeding information since 2015 to the “Men In Black,” as he puts it, on
Maria Butina, a Russian grad student with whom he had a romantic
relationship. She is serving an 18-month prison sentence after plead-
ing guilty to conspiring to act as a foreign agent, in connection with
her efforts to infiltrate conservative political circles before and after
the 2016 presidential election.
In his resignation letter, Byrne cited his involvement in “govern-
ment matters” as complicating “business relationships, from insur-
ability to strategic discussions regarding our retail business.” Byrne
says what he has done (exactly what remains unclear) “was necessary
for the good of the country, for the good of the firm.” Byrne concludes
his letter by stating: “Coming forward publicly about my involvement
in other matters was hardly my first choice. But for three years I have
watched my country pull itself apart while I knew many answers, and
I set my red line at seeing civil violence breaking out. My Rabbi made
me see that ‘coming forward’ meant telling the public (not just the
government) the truth. I now plan on leaving things to the esteemed
Department of Justice (which I have doubtless already angered
enough by going public) and disappearing for some time.”
In a call from his car minutes after delivering a farewell speech to
his employees, Byrne said he had his bags packed. “I will be sitting
on a beach in South America shortly, and that is all I want to think
about,” he says. “I want to focus on getting back into good shape, doing
yoga and becoming a vegetarian.”he existential crisis Byrne is putting his Salt Lake
City-based company through comes after a career pio-
neering e-commerce. Nearly two decades ago, Byrne
was lauded as “The Renaissance Man of E-Com-
merce.” The closeout store he took control of in 1999
for $7 million was on its way to becoming an e-tailing phenom, with
a peak market capitalization of $2.2 billion. But in the hypercompeti-
tive digital age, disruptive business models don’t last long, and today
Overstock—once an innovator—is a has-been.
By the time of his resignation, Byrne had all but given up trying
to compete with the likes of Amazon and Wayfair, and had spent the
last two years unsuccessfully attempting to unload Overstock’s retail
business. Just as e-commerce captivated Byrne at the turn of the mil-
lennium, blockchain was his shiny new obsession. So Byrne funneled
Overstock’s dwindling resources into blockchain ventures—more than
$200 million since 2014. About 30% of that sum went into 18 early-
stage companies that are building a suite of blockchain products. The
rest has been seemingly squandered on a personal vendetta: Over-
stock is creating a blockchain version of Nasdaq, which Byrne believed
could end, among other things, the naked short-selling that he claims
plagued his company for much of the last 15 years. Byrne attracted an
eclectic mix of allies, ranging from Akon and the World Bank to the
infamous short-seller Marc Cohodes and the city of Denver.
But the walls closed in on Byrne’s quixotic adventure. Overstock’s
heavily shorted stock has plummeted 92% since the start of 2018.
Once reliably profitable, Overstock lost $206 million in 2018 and
$110 million in 2017. Last year, Byrne fired at least 400 people.
Even worse were the cracks forming in Overstock’s new strategy.T
1976: Byrne’s father,
Jack, goes to work
at troubled Geico
and turns it around,
attracting an invest-ment from Warren
Buffett, who will later
call him the “Babe
Ruth of insurance.”
1976 : As a teenager,
Byrne starts spend-
ing time with family
friend Warren Buffett
(below).1985: Diagnosed with
testicular cancer
after graduating from
Dartmouth.
1986: Embarks on
cross-country bicycle
ride; a few years later
he beats cancer for
the third time.1989 : Finishes stint at
Cambridge University
as a Marshall Scholar.
1994: Receives Ph.D.
in philosophy from
Stanford.PATRICK
BYRNE’S
WILD RIDE1997: Accepts job
offer from Buffett
to run Berkshire
Hathaway-owned
uniform manufacturer
Fechheimer Brothers.1999: Acquires a
majority stake in D2-
Discounts Direct for
$7 million; later re-
names it Overstock.
2002: Takes Overstock
public in a Dutch
auction; stock begins
trading on Nasdaq.2005: Becomes
obsessed with naked
short-selling;
files first lawsuit.2007: Files second
short-selling lawsuit,
against Wall Street.
2014: Overstock
becomes first major
retailer to accept
bitcoin as payment.
2016: Byrne takes
medical leave, due to
complications from
hepatitis C.2017: Puts the retail
business up for sale.
2019: Byrne reveals
he is an FBI informant;
resigns a month later.