Episode 82 – Featuring Overstock.com Founder/CEO Patrick Byrne

Sith Lords……Zombie Apocalypses….Overseeing a Billion Dollar, Publicly Traded Company…..All In a Day’s Work For Overstock.com Founder/CEO Patrick Byrne

It’s been said that a typical entrepreneur tends to live by his or her own rules.

That typical entrepreneur would probably take a look at Patrick Byrne and say, “Wow!”

Byrne, the son of longtime Geico CEO John Byrne, has certainly amassed his share of milestones in his 50-plus years:

PHD from Stanford (in Philosophy).

Protege of Warren Buffett.

Three-time cancer survivor.

Black belt in Tae Kwon Do.

Professional boxer.  (Well, he attempted to, during his days at Stanford).

But it was a decision he made in 1999 that set the tone for the rest of his wild entrepreneurial journey.  At the time, the ability for companies to sell their wares on the internet was in its relative infancy, with e-commerce titans Ebay and Amazon just a few years old at the time.  While those two grew larger and larger in scope, many, many other such companies fell by the wayside.

But Byrne had a vision.  As neat as it was to, at the time, go shopping for, essentially, whatever you needed while sitting at home in your pajamas, what if you were able to actually find bargains at the same time?

Fortunately, opportunity came knocking in the form of D2: Discount Direct, an online retail startup predicated on the idea that they would take the unsold inventories from failed dot coms and liquidate them on their site.

D2 certainly had a dream niche, but what they did not have was money.   Enter Patrick Byrne, who invested $7 million (most of his net worth) for a majority share of the company.  He quickly became CEO, changed the name to Overstock.com, and off he, and the company, went!

By 2000, Overstock had made its first million, featuring just under 100 products.  But that was just the beginning, and the niche play Patrick had gambled on paid off big time, en route to an IPO just two years later.  By 2009, annual profits had reached over $7 million, and by 2010, Overstock had become a billion-dollar company in terms of annual revenues, specializing in hundreds of thousands of products, expanding well beyond the mere….well, overstock….of failed companies.

Despite the success of his company, Patrick was not one to leave well enough alone.  While shares of his company were being traded inside Wall Street, Patrick was on the outside, so to speak, railing against many of the practices of Wall Street traders, including his biggest pet peeve for which he has attained a degree of notoriety, the practice of naked short selling.  (He became known in investment circles for his role in a 2005 conference call in which he declared that Wall Street was driven by a “Miscreants Ball” of players who had conspired to exploit systemic investment flaws to drive down the stock price of many companies, including Overstock.com, and that this effort was, in fact, headed by a “Sith Lord”.)

Many observers hailed Patrick as a prophet, of sorts, citing that the economic turbulence the U.S. had experienced during the late 2000′s was due in part to the practices against which Patrick had been so vocal. On the other hand, critics cited Patrick’s efforts as desperate and conspiratorial in nature, and not worth the time to pursue further investigation.

Patrick Byrne’s campaign against the perceived evils of Wall Street was just one of a number of the maverick entrepreneur’s “against the grain” philosophies that have caused many to take notice. The pattern continued early this year, when Byrne planted himself firmly in support of the controversial virtual currency known as Bitcoin, citing it as the U.S.’s primary hope to save it from a “zombie apocalypse”.  (His term for what he sees as another looming recession).

Byrne certainly has a lot to say about business and the economy, and on this edition of The Raja Show, he talks with with Raja about why he thinks what he thinks.  He also discusses his own story, and what he was able to do to position Overstock.com so strongly in a marketplace where many fellow dot coms fell notoriously short.