The Rise and Fall of Overstock's Patrick Byrne

Patrick Byrne served as the CEO of Overstock, a company he founded, from 1999 until 2019. However, a lot of people might go as far as saying that he sort of went off the rails in 2019, making a lot of wild claims and doing things that most CEOs would never allow themselves to be caught doing.

Eventually, it resulted in him separating from the company because they no longer wanted to be associated with his antics. Here, you can learn how he grew to such an enormous level of success and how he turned around and lost it all because he couldn’t control his own behavior.

How It All Started

Byrne’s father, John J. Byrne, worked for Warren Buffett’s company, Berkshire Hathaway. As such, the family wasn’t exactly struggling from a financial standpoint and they could afford to get their son a good education. They believed that a solid education was the key to achieving success in life so they sent him to all the best colleges around the world.

As a matter of fact, he attended colleges in places like China, England and the United States, all in the hopes of achieving the level of education he wanted to do virtually anything as a profession.

While he worked to build up a couple of smaller companies, he also attracted the attention of those individuals in charge of what would eventually become Overstock.com.

At the time, it was a completely different section of another company. Therefore, Byrne himself is largely given credit for the development of the company as it is known today.

Despite all of his antics, there is every chance that the company would not even exist in its current form if it hadn’t been for the fact that he had the vision and the drive to help it become the type of company that it is now. That said, it seems that all good things do indeed have to come to an end, as did his reign with the company.

Views on Investing

Byrne had a number of rather unique views about investing. In addition to that, he tended to have very strong feelings about the way investors should behave and he wasn’t the least bit afraid to put that information out there for everyone to hear.

As early as 2005, he ended up on the wrong side of practically everyone in the Overstock boardroom because he had made some very abrupt comments about people that participated in short selling as their primary means of investing.

For anyone who isn’t already aware, short selling refers to investing in such a way that you deliberately sell something when it looks like it’s about to take a hit, thereby allowing you to make a lot of money. Some people are very much against it because it essentially means that you are intending to profit from the failure of others.

After all, when you decide to sell short, you’re doing so with the knowledge that the stock that you had initially purchased is not doing well and a lot of people are probably going to lose a great deal of money.

While most people don’t look down on the decision to get out of stock that isn’t going the way you had hoped while you still can, they see it as a very different thing when you purchase stocks with the express intent of short selling because you are then cashing out on the misfortune of others. This was something that Byrne felt very strong about and he wasn’t afraid to let everyone know it.

The First Sign of Problems

He actually composed a list of people that he considered problematic investors due to short selling and he seemed to be going after each and every one of those people as a means of shaming them publicly so that everyone would know that they couldn’t be trusted.

By 2005, the other executives at Overstock had become extremely concerned that he was spending a lot more time working on this type of thing than he was on running the company. As a matter of fact, even his own father agreed that he was not handling the company the way that he should have been.

This was also reflected in the financial statements from the company, as the same company that had always been a solid performer was now starting to experience a series of financial losses.

Executives at Overstock felt very strongly that the reason these losses were occurring was because Byrne was not paying attention to company operations, instead using that time to go after people that incorporated methods in the stock market that he did not agree with.

Growing Issues

Unfortunately, the issues that he had which were distracting him only seemed to get worse as opposed to getting better. Despite the fact that other executives at the company, as well as his own father, spoke with him on the matter several times, he continued to ignore all of their warnings.

As time went on, he began to devote more and more time to tracking down people that had an investing strategy other than his own, all while he was spending less and less time working on anything related to the company itself. As such, Overstock began to experience more losses, this time far more severe than those initial losses they had been concerned about.

To make matters even worse, many executives at the company had begun to fear that people would start to associate the company itself with Byrne’s views. That was a problem for two reasons. For starters, his views were becoming more and more extreme. In addition, he was also becoming more vocal about those views.

He was no longer content to simply have his views and leave it at that. Instead, he was posting that information on every social media platform that he could get his hands on and speaking out about it at every opportunity, often at public events that had nothing to do with this type of thing.

As a result, everyone else at Overstock became concerned that the company would lose even more business because of his extreme behavior. It quickly became apparent that something needed to be done, but the company executives weren’t entirely sure how to handle the situation so that he could simply move on as quietly as possible.

In a turn of events that is still difficult to understand, he continued to be the CEO of the company for another fourteen years, despite the fact that he displayed this type of behavior at various levels of intensity throughout that entire time.

The Affair With a Spy

In addition to his rantings about people in the stock market and the political arena, he also had a very well publicized affair with a person who ultimately turned out to be a Russian spy, of all things. It’s so hard to believe that anything like this could actually happen that it almost sounds more like a movie script than anything else.

Nevertheless, it did indeed happen. It was after this event in 2019 that Overstock decided it was time to quietly part ways with him, effectively distancing themselves from him as much as they possibly could.

Keeping Things Quiet

Since the company didn’t really want to attract any more attention to itself than Byrne already had on their behalf, they tried their best to essentially remove him from his position as CEO as quietly as possible.

It wasn’t anything that they really wanted to end up in the mainstream news because they didn’t want to be associated with his antics in the public eye. In addition, there was a great deal of concern about the fact that he had been exhibiting increasingly questionable behavior for more than a decade, yet he had also been allowed to continue on as the company CEO.

Executives at the company felt like this would cause people to ask a lot of questions that they didn’t necessarily have easy answers for. As such, they tried very hard to keep the majority of what was going on with him out of the news.

That said, it is almost impossible to keep things out of the public eye in an era where everyone has both a voice recorder and a camera, not to mention the ability to upload virtually anything to various social media platforms in the blink of an eye.

As a result, the news eventually came out and when it did, Overstock was anxious to make sure that everyone knew that they didn’t share Byrne’s views, nor did they want anything to do with him or any of the things that he tended to associate himself with.

Taking Over

Eventually, things got so desperate at Overstock that Byrne’s father, John, volunteered to take over as the company’s interim CEO until they could get things ironed out.

There is something to be said for the fact that Byrne’s own father had tried to talk to him so many years ago about his behavior and now, this same individual was actually taking his place as CEO because he no longer felt that his own son was qualified to do the job.

Apparently, that sentiment was shared by virtually everyone at the company. They were anxious to simply get on with the day-to-day activities involved with doing business. They wanted to be associated with Byrne in no way, shape or form.

The Bigger Picture

There is no doubt about it, it all comes down to understanding the bigger picture with regard to doing business. Overstock is a firm that requires public support in order to remain viable. If the public are no longer willing to buy their goods, they have virtually no chance of survival.

In a day and age where news spreads like wildfire on social media and people have a tendency to black list entire corporations based on rumors and conjecture, the executives at Overstock were absolutely terrified that their company was going to end up bankrupt if anyone found out what had actually been going on.

As such, they genuinely made the decision to keep their heads down and simply focus on getting their company back in good financial shape so they could move forward. It’s been a long road, but it’s also one that most of these individuals feel was very much worth taking.

At the end of the day, most individuals will still be willing to do business with Overstock. There is no question that there are a few individuals that were so deeply offended by some of Byrne’s earlier comments that they stopped doing business with the company long ago. That said, the past cannot be changed.

Executives realize that what is done is done, so they prefer instead to move forward with what is possible in the future. Looking back, they realize that they probably should have done something with Byrne’s involvement with the company a long time before they actually did.

Nevertheless, they hope that they will be able to put even more distance between him and themselves as time passes. In fact, the executives at Overstock hope that there will come a day when people will no longer associate Byrne with the company at all. That may be a long time coming, but it is the work that they are involved with for the foreseeable future.

You can also read: