The Big O: A Closing Word

Nothing is more tacky than an ex-CEO hanging around his former firm and kibitzing what they are doing. On the other hand, given that I was CEO for part of Q3 and there are many people asking fair questions of me, I think I should answer them. I also am comfortable talking about aspects of the past, especially where they have greater significance for the subject of Deep Capture. But I am now 100% disassociated from Overstock, and people should stop asking me to comment on current management’s activities or decisions, or to connect someone here to some person there to handle some token sale or product placement. You need to contact them yourselves.

  1. Due to a controversy which began bubbling into the public’s awareness on July 26, Overstock’s then-CFO reported on Saturday, August 17, in writing to the board that it was “impossible” to get D&O insurance with me at the firm. While some aspects of his report were a tad ambiguous, when one gets into the business of parsing with the CFO and Chair what “impossible” to get insurance means, it is time to leave.
    • On that day, I wrote the board and told them that this fact was decisive, and that I would eject from the firm. Precisely one director contacted me to say he supported my decision to come forward to America about what I had been involved in, and that I should stay. But in conversation with the Chair it was made clear to me that “the Board” wanted me dissociated from the firm.
    • I immediately instructed my personal (not corporate) colleagues to work with Jones Trading to prepare to sell all my stock.
      • I learned that it would all take a couple of weeks working with Jones Trading: moving around shares from bank boxes in Switzerland and two accounts in the USA, getting opinions, removing legends, all that legal stuff. I am sure there are > 100 emails and such between Jones Trading and my personal legal team documenting that lots of hands got busy and many people spent sleepless nights to get those 5 million shares ready for sale.
      • I would be filing a Form 4 reporting my sales. To avoid letting it affect/mess up the upcoming dividend, I asked them to make the sale as late as possible while still being able to announce it all at least one day before the September 19 “no-div date” on the dividend, so all information would be completely known in the market when the market found its market clearing price for our stock (that way, no one could claim later that they had not made the decision they would have otherwise made if they had known of my departure). Thus, by September 18. But normally the last date in the quarter in which I could sell would be the blackout date of September 15: since that fell on a Sunday, it would make September 13 the last date I could sell, but it was unclear if that blackout rule applied to me after leaving the firm in the quarter.
      • So in sum: by August 18 my decision and instructions were that all shares were to be sold and reported by September 13 or September 18 (depending upon how that last legal issue was resolved). Again, I am sure that countless emails document all the good work done between Jones Trading and my personal office. Also, I can name seven people at the firm whom I informed of this plan: that I would completely sell all shares during the week before the no-div date, so they should not to be shocked when they saw it.
      • A legal opinion was delivered that the September 13 date was not binding after I left the firm, and it could be September 18. Thus, my final instructions were that all shares would be sold September 16-17-18, and the announcement made at the end of trading September 18. Thus, all information would be in the marketplace for the final day of trading before the dividend.  That way, no report of my sales too far ahead of the no-div date would mess up the dividend, yet no one could say I was trying to ride a squeeze (if it happened) to the end, either.
  2. On Tuesday, August 20, we celebrated our 20th anniversary. On Thursday August 22 I said my goodbyes and left. In the announcement of my departure, I included an updated letter presenting my state of knowledge at that moment. The letter was thoroughly reviewed by all appropriate parties within the firm, and represented my precise state of knowledge on every front. Again, I wanted no one to have anything to gripe about later.
  3. I emailed the execs and said I wanted to be sure no one sent me any information after that moment. I also told them that I was leaving for Asia, would on a boat sailing around an obscure part of Indonesia, and would be out of communication. I did all that so that no question of Material Non-Public Information could possibly be raised. Why? Because I have learned that in moments such as that, when so many dots are being created, then no matter what happens subsequently, someone will be able to find dots that they can connect this way or that so they can argue that mischief was afoot. I wanted to eliminate all possibility of tears later.
  4. That was that. I left it to my private office to execute this  decision, I got on a plane, I left the USA, and I went 100% dark on communications to anyone at OSTK. This was easy, because I was floating around among islands generally without Internet or cell coverage, with no satellite up-link. Deliberately. That is to say, I went to the proverbial “end of the earth” to create a situation so that I would have no information past mid-August, the stock sales were on autopilot, and I was to be as divorced from it all as one can possibly be divorced. So no matter what happened, no tears from anyone. If the stock spiked to $100, if it cratered to $5, if if if…. None of it mattered. The autopilot was on. There could not possibly be tears from anyone.
  5. Over the weekend before the sale, we sailed within range of a cell phone tower, and I received a text (as I recently discussed on “Liquid Lunch”) that the boys from the prime brokers were in Bobby Vans (a Wall Street watering hole) on Thursday and Friday, September 12 and 13, saying that the SEC had leaked to the prime brokers that they (the SEC) were going to put the kibosh on the dividend, and that they, the prime brokers, we leaking it to their clients. Really. I have the text from midnight Saturday, September 14, from when the boat came within range of a cell antenna. We talked: the report was the boys in Bobby Vans were specifically saying that their firms were getting this from the SEC.
  6. Now I was in a quandary. My decision was made and instructions given three weeks earlier.   But now I had also heard a rumor that the SEC was leaking something. What were my duties to the marketplace? Legally, I had none, I think, but it seemed ethically problematic. Do I have inside information if I hear the SEC is leaking something? Or does the fact that the SEC is leaking it make it not inside information?  It seemed perhaps worthy of lengthy Talmudic debate, but one thing I knew: it did not seem fair that the primes were given preferential leaks by the SEC, so I leaked the SEC leak to the marketplace in a blog I drafted and posted in between SCUBA dives.  
  7. I would think that from all these steps, I am about as pure as the driven snow on the fact that I sold all my stock. Could anyone have bent over backwards farther than I did to both accommodate the wishes of the shareholders (expressed through their representatives, the board), eject so quickly (3 days) from the firm and board, finalize the divorce by setting up a hands-off process so it would all be carried out without me, then go 10,000 miles away and start spending my days under 100 feet of water in the most remote part of Indonesia? Is there any step I might have taken to be more pure on that?
  8. Subsequent days saw some surprises for me:
    • OSTK announced that they delayed the dividend but would be working to get the dividend registered so it could trade freely.
      • I would not have backed down to the SEC, because I am spoiling for another fight with them (as the discerning reader may note). Everything was announced in late July, Mr. Shorty was sleepy and stepped on his weenie, and if the SEC objected after the fact, I would love to have met the SEC in court and put them on trial. Current management has a different style, as is their prerogative.
      • I am pleased and impressed to see that OSTK has already filed to register that dividend: if granted (and how odd it would be if the SEC turned that down, given that such shares have already been live and trading on tZERO all summer), it should obviate the concern about a squeeze.
    • September 24’s announcements regarding:
      • The CFO’s departure – Not a surprise he is gone, but the speed of it surprised me. I have not read it (I have read little press since I left: I got 20 words into a Lauren-from-Forbes piece, and knew what Party Line instructions had been issued), but I have been told that he slagged me to the WSJ on his way out. That says all that needs to be said.
      • JJ as CEO and Rob Hughes as CFO: great news both. Shareholders will note one difference immediately: when I gave estimates to the public on any subject, I always gave my best guess estimate: that is, I choose estimates that I believed we had a 50% chance of meeting or exceeding, a 50% chance of missing (this gave my detractors numerous opportunities to call strikes, about half the time I made an estimate, but I bet if all off my predictions over the years were tallied one would find about as many base hits as strikeouts). Jonathan and Rob have a different mentality: they will make predictions that the company has at least a 90% chance of hitting (if anything, I would fear their natural conservatism will reinforce each other’s, leading to too much conservatism in their predictions). They will want to bat .900, whereas .500 was my goal.
      • The change in forecast:
        • Tariffs – They were hardly a secret. I’m not even sure what state they were in with President Trump when I left.
        • D&O – I am surprised this is still a problem, as both the CFO and Marsh (our insurance broker) wrote emails alleging that my presence was what made getting insurance difficult (or even “impossible”). I thought the problem would solve itself with me gone.
        • Waning consumer confidence – Again, not a secret. In the month since I left, it has become increasingly clear to me that the economy is fraying. German manufacturing has hit the skids (having an Italian central banker for Europe is going to work out for them just as well as it does for Italy).  Housing is a good surrogate for furniture sales: watch that.
        • Freight:
          • The Watkins-Schneider bankruptcy happened in early August. I do not recall it coming up at the executive level beyond (perhaps) a mention that the logistics team was rolling some business around among OSTK’s dozens of freight carriers. But I am not even sure about that.
          • I understand that when they closed the August books in September they found that the carriers to whom they had moved had been more expensive than Watkins-Schneider, partially on account of the suddenness of the rolling over of business beyond the capacity for which those freight firms had planned. That starch in pricing may work itself out with time and planning.
          • Watkins-Schneider might account for (as I recall/estimate) ≈ $10 million/year of freight spend. So if one assumes the alternatives are 10%-20% more expensive…. You do the arithmetic.
        • Increased search traffic – When I left five weeks ago, search traffic (a good measure of both Google ranking and brand familiarity) was increasing nicely: there was some evidence that patriotic Americans in support of my coming forward about things were giving us a new look.
        • It is also quite normal with search traffic that when something happens to make it increase, it goes up for 4-8 weeks before it starts converting. That is how it worked every times in the past, anyway: people start arriving through Google again and again, get familiar with the site, and in a month or two start buying.
        • However, that has to be offset against the economic worries that seem to be shading the world as well.
        • Pebbles on each side of a scale.

You now know everything I know, everything I knew, and when I knew what I know and what I know about when I knew it.

As I said at the outset of this essay, it is tacky for an ex-CEO to linger around a firm after departure. I am gone as gone gets. I am no longer going to discuss anything about what is going on within Overstock. Given that I was CEO for the first half of Q3, it seemed barely appropriate that people have been asking me questions about Q3, either regarding my actions or the firm’s actions. However, from this point forward, any questions about what is currently happening or will happen at Overstock will be met with a one word answer: “Inappropriate”.

You may hear me clear up mysteries about what happened in the past, however. Not because I have any interest in reliving any of it (I have moved on to new worlds). But because sometimes it may fit into other narratives that need to be shared and dynamics that need to be exposed.I am, after all, at liberty. And as the old joke goes, “What’s Irish Alzheimer’s? That’s when you forget everything but your grudges.” If you thought 2005-2008 was a wild ride, hold onto your hat.

Free at last, free at last, thank God almighty I’m free at last.

Your humble servant,

Patrick M. Byrne

Founder & CEO (ret.)

  1. Very few people have the courage to expose corruption and speak truth to power on national TV like Patrick Byrne did.
    Link to his interview exposing corruption on Fox Business:

    Patrick had to resign from Overstock and sell all his stock to protect the company and himself.
    I think they certainly both deserve support so here are a few suggestions:

    1)Buy from Overstock and give Overstock gift certificates to others

    2)Buy stock in Overstock.Ticker symbol is OSTK. After you buy stock place a GTC(Good Til Canceled) Limit Sell order for $200 a share or more to prevent your shares being loaned out to short sellers who might try to drive the stock price down.

    3)Download the TZERO Crypto App on your smartphone and buy Ravencoin. Overstock already owns a lot of Ravencoin and TZERO is majority owned by Overstock/Medici

    4)Join Pro freedom social network MINDS where freedom of speech is respected users earn crypto tokens for using the site.Overstock/Medici owns about 24% of MINDS

    It is up to We The People to stand up and unite behind basic principles like truth,freedom,goodwill,integrity,The Golden Rule and the Non-Aggression principle to make positive change.

    The corrupt politicians of both corrupt parties will not care about these principles until We The People show them We care about these principles.

    Most politicians who claim to be public servants are really self servants/crony servants.

    If We The People unite behind someone like Patrick Byrne for having the courage to expose corruption and speak truth to power on national TV, We can not only help him but also help ourselves in making a better world. Thank You

    1. So what are We The People going to do about corruption, censorship and surveillance by media/tech/finance giants and government? I will keep posting this plan of action for immediate change as it is the best idea I can think of for now to counter this in a peaceful,productive manner.

      1)Cancel Cable TV (All channels should be available individually so consumers don’t have to give money to stations they don’t want to)

      2)Bank with small local banks/credit unions & invest with small brokerages & insist your employer/pension fund do the same.

      3)Do Not donate money to politicians & consider boycotting companies that give them money or pay them for speeches.
      Some might decide to boycott Facebook,Twitter,Apple,Amazon and Google for censorship issues alone.

      4)Support a pardon for Julian Assange & Edward Snowden and other whistleblowers/truthtellers

      5)Join Pro freedom social network,where freedom of speech is respected & users earn crypto tokens.

      6)Use web browsers like Dissenter or Brave rather than Chrome or Safari when you surf the web.
      Use search engines like DuckDuckGo rather than Google or Bing for web searches.
      Use an email service like ProtonMail rather than Gmail.
      Post videos on Bitchute and MINDS rather than Youtube.

      7)Use Linux operating systems like Linux Mint,Ubuntu,Gallium or others on your computer rather than Windows , Mac or Chrome OS.
      Keep your eyes open for alternatives to apple/android smartphones in the near future.

      8) Do NOT support the “War on Drugs” which causes more crime,death,murder,gang violence and incarcerations,enriching criminals while millions of people still use illegal drugs anyway.

      9) Support a new foreign policy where We The People worldwide unite behind and promote the principles of truth/freedom/goodwill/integrity/humility/Non-Aggression Principle/Golden Rule and focus on winning hearts and minds.

      10) Support a worldwide effort to voluntarily help others in the hope that it will win over more people to these principles.

      Please share this plan of action with others via text,email & social media if you agree.Here’s a link to share this message.Thank You

      It is up to We The People to stand up and unite behind basic principles like truth,freedom,goodwill,integrity,The Golden Rule and the Non-Aggression principle to make positive change.

      The corrupt politicians of both corrupt parties will not care about these principles until We The People show them We care about these principles.

      Most politicians who claim to be public servants are really self servants/crony servants.

      Therefore,We The People must unite behind basic principles and take some of these simple actions if We expect things to change for the better.

      Anyone got a better idea?I’m listening….
      Thank You.

        1. Agreed. Enough already. Patrick should start deleting these if you keep it up. Not just any new ones, but all the duplicates from the past.

  2. Patrick thank you again for the news and all the hard work and your fight that you have been doing. Now that that chapter is closed can we move on to current issues.

    Talk to us about ravencoin. Say the things you couldn’t say as a CEO. And I know any programmers hanging around that want to do some second layer stuff I’ve got some fantastic ideas. How about starting a new company? you got a great platform to work with. Also could you send some ravencoin over to Ravenland.Org Adams doing some fantastic work all on his own and now the prohect is depending on our community for support. Also buy some CATE asset token it’s backed by gold.

    I know you’re busy now you’re not a social media freak but join Discord once in awhile Bruce and Tron do.

    1. Was that meant as a reply to my post above yours? 🙂

      Where did your Red text name go, that was handy for making sure it wasn’t an impostor

  3. SUPPORT THE SQUEEZE. Let her rip Patrick. Let’s all inflict some Grudge Pain. Buy Overstock. Lock, stock and barrel. Sweet Revenge will prevail without fail.

    Byrne Trump in 2020. Draft Patrick

  4. Patrick, perhaps all of this has happened so you could concentrate on a different aspect of your life — your spiritual path. Meditate to clear your head so you can receive information regarding your next steps in this lifetime.

    1. Pam,
      I am on a spiritual path. I am doing what I had to do. It is why I had to leave the firm. I mean, the sinurance stuff was the proximate cause. But I knew when I came public that it might make it necessary for me to leave. i choose this path.

      Some of you don’t get it yet: I am on the offensive. I really am. Lots happening. Read the papers over the next few days.

  5. “Way in front of everybody else”

    The Czechs have a saying “while the two are fighting the third is smiling”

    So instead of watching you enlightening us with the Blockchain Tech Stack For Civilization and how Medici will empowering billions of people around the world for the first time with the opportunity to have financial choice, we are going to be watching you taking-out the Wall Street and SEC foul players?

    While your competition gets their chance to catchup!

  6. Patrick,

    I deeply respect you and worked with you for over 15 years. I want you to know that you made a huge impact on my life. Thank you for providing a path for me to learn and grow. That growth has given me the opportunity to branch out on my own and start anew. My wish for you is that you can clear your head and finally rest that busy brain of yours. Thanks for your transparency through all of this — takes a brave/true soul to do what you did. I hope our paths cross again someday.
    Kaizen, my friend.

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