Patrick M. Byrne, Chairman and CEO of Overstock.com
George Frey | Bloomberg | Getty Images
Overstock CEO Partick Byrne resigned from the e-commerce company Thursday after making controversial comments about his role in the "deep state." Shares of Overstock popped as much as 17% after being stopped for the news. Stocks rose by about 9% in the afternoon.
"In July, I reached out to a small set of journalists about my involvement in certain government affairs. To do so was not my first choice, but I was reminded of the damage done to our nation for three years and felt my duty As a citizen, I exclude myself from staying longer, says Byrne in a statement. "… Although patriotic Americans write me to support, my presence can affect and complicate all kinds of business, from insurability to strategic discussions about retail."
"Thus, while I believe I did what was necessary for the good of the country, for the good of the company, I am in the sad position of having to break ties with Overstock, both as CEO and board member, with effect from Thursday, August 22," he added.
Overstock said it would appoint Jonathan Johnson, an Overstock board member and president of Overstock's blockchain subsidiary Medici Ventures, as its temporary ad Chief Executive Officer.
Allison Abraham, chairman of Overstock's board of directors, said in a statement.
Byrne, who founded Overstock 20 years ago, has been in hot water since responding to allegations of his involvement in the federal government's 201
In a statement, he referred to federal agents as "Men in Black" and said he helped with investigations related to Clinton's and Russian interference.  In an interview with The New York Times, Byrne claimed that he was romantically involved with Maria Butina, the Russian operative who used her NRA activism to infiltrate American politics. She was later sentenced to 18 months in prison.
Read the full letter from Byrne below:
In July, I came to a small set of journalists regarding my involvement in certain government affairs. To do so was not my first choice, but I was reminded of the damage done to our nation for three years and felt that my duty as a citizen prevented me from staying longer. So I arrived as carefully and well managed as I could. The news I shared bubbled (though randomly) into the public. Although patriotic Americans write me in support, my presence can affect and complicate all kinds of business, from insurability to strategic discussions about retail. Although I believe I did what was necessary for the good of the country, for the good of the company, I am in the sad position of having to break ties with Overstock, both CEO and board member, with effect from Thursday, August 22. .
This opportunity or even the probability has been ahead of me for over a year, since certain news went public in July 2018. July 15 of this year, expecting me to be gone before our last (August 8) earnings conversation, I wrote the most detailed letter to the shareholders for a long time. Here are the key points from this letter that you should know as a shareholder:
- I think the blockchain revolution will reshape important social institutions. We have designed and breathed life into perhaps the most significant blockchain keiretsu in the world, a network of blockchain companies seeking to revolutionize identity, governance (= rule of law = potential = capital), central bank, capital markets , supply chains and voting rights. In three of these fields (land management, central bank and capital markets), the word "trillion" comes up when you calculate the disruptive opportunity of blockchain. In these three fields, our blockchain progeny (Medici Land Governance, Bitt and tZERO respectively) are arguably the leading blockchain offenders in existence.
We are facing a competitor who (by the end of this year) will have lost close to $ 3 billion, and recently announced that it will seek to raise another $ 750 million, which will cover expenses when the two lines in the graph intersect (cf. below right).
Following my poor attempt last year to copy the competition's strategy, retail has reached a state of positively adjusted EBITDA (cf. . Graph on the left).
A media excerpt accompanying this announcement is available by clicking the image or link below:
Leadership – We have the most solid leadership team we have ever had. Our ab initio redesign of our executive structure, which started a year ago, has led to a better integration of all functions and proper management of them than we have ever achieved in our history.
Chief Marketing Officer JP Knab is the greatest master of digital marketing I have ever encountered. I will miss seeing Commander Data find new arbitrage.
Kamelia Aryfar is a computer scientist and machine learning specialist of some known name: Dr. Aryfar originally cut her teeth on Etsy, and in her two years with us has led Machine Learning overhaul of our company (where we are 40% complete).
The integration of Skynet (Camelia's name for her AI creation) continues across marketing and sourcing, and as it increases decision-making, we discover ways to find continuous gains.  Recognizing the importance of machine learning in our world, Kamelia has been named Executive Vice President and has also been appointed to the Board of Directors. She is an extraordinary asset to the company and she will do great things for you shareholders in the future.
Dave Nielsen is one of the few OG dealers I have ever met who did prop-to-jet conversion. He is as skilled as they come and is widely admired within the company. He has already served as president and has been a major part of our radical bottom line improvement this year. He is a real adult. He knows that the mission is to continue to provide room and resources for Kamelia, JP and others to continue bringing in the tens of thousands of millions of dollars of improvements to the Retail bottom line by focusing on making our Retail page a gem of technology and leaving multi-billion losses to others.
Over the past three years, Jonathan Johnson has done an extraordinary job of converting the mistreatment of entrepreneurs, futures and your capital into the most sensational keiretsu of well-formed blockchain companies in the world. He has proven to be an extremely capable partner who gets the sight. I welcome that he will serve as CEO of the entire public company. You couldn't have a more stable, responsible leader. The reason we have been such good partners is that Jonathan is the opposite of me in many respects. There is no doubt that it may be welcome in some quarters. He has keiretsu he has the roadmap, he understands that the goal is to nurture keiretsu to its full potential while allowing the retailer to focus all its efforts on technological perfection rather than loss accumulation.
We have removed the gun from our temple. In the near future, I believe that the cash generated by Retail in the future should be sufficient to fund both Retail's ongoing innovation (we captured the Machine Learning wave right here and have a first-class team reinventing the company from an ML perspective), and care for maturity our keiretsu of blockchain companies, in particular tZERO, Medici Land Governance, and Bitt (well, and Voatz, too) – especially with the potential of less cash burnout, either through outside investment, or from the fact that their products (such as tZEROs) reach the market.
During the discussions with brick and mortar last year, as we filled in the models with data, we would generally find that if we were part of a brick and mortar chain with a national footprint, it could be $ 200 million in annual savings (primarily but not exclusively in logistics). On the other hand, if they were linked to certain high traffic sites but did not crack the revenue generation, models showed that with us there could be savings of $ 150 – $ 200 million.
In the absence of any such hybridization, I believe that just by continuing to become the supply chain smarter we can find $ 40 million of the savings on our own in 12-18 months. We have introduced Advertising Technology this summer which will (I think) generate a similarly attractive number over the same timeframe. So assuming Retail makes $ 115- $ 120 million on the bottom line this year than last (our range of estimates), and I expect that next year to make tens of millions of dollars in bottom line improvements again seems reasonable to me.
You think, I think Gods of Economics thinks such a hybridization of business models is doable. It can take many forms, from collaborative partnerships with a brick and mortar, to an acquisition (for a fund with ambition, the final form can be a pile of all three layers and a $ 300 million bottom line recovery while establishing something unique ).
Composite – The best thing to do for shareholder interests is to use cash flow to mature the blockchain keiretsu companies to be executed as we continue to run the retail business focusing on refining it as an exquisite gem of a technology platform rather than trying to go head-to-head with any company in the process of losing billions of dollars. Refining the technological gem is what gives value to bricks and mortar as we represent a way to jump to the front of the pack technologically. If the right strategic offer is put in place that reflects the value of the technological gem, I'm sure the board will consider it. It is possible that my absence will promote the opportunity.
On any normal day, my presence is not favorable for strategic discussions regarding the retail trade. I believe that my presence in the future will definitely be beneficial for such strategic discussions. And if the hors d & # 39; oeuvre that was recently served caused the market such indigestion, it would not be in my shareholder interest for me to be around and when a main course is served.
has been an honor to serve you through thick and thin, grandiose and arcane threats, for the past 20 years. You own some disruptive assets here. One of them changed how furniture is purchased in the United States and has posted a record of GAAP profitable years that are virtually unparalleled in B2C eCommerce, on a fraction of the capital of every competitor they have ever encountered (a fact most people missed) . And you own blockchain assets that seem ready to revolutionize capital markets, finance and governance for the poor. There have been 20 years of startling innovations from a team now honed for it.
To come out publicly about my involvement in other matters was hardly my first choice. But for three years, I have seen my country pull apart while knowing many answers, and I set my red line to watch civil violence break out. My rabbi made me see that "coming forward" meant telling the public (not just the government) the truth. I am now planning to hand things over to the reputable Department of Justice (which I have no doubt already become violent enough to publish) and disappear for some time.
I wish all shareholders a steady and steady path … And don't forget to trade Overstock.com!
Your humble servant,
Patrick M. Byrne