I took to these pages upon departure because I felt I should immediately clear up mysteries surrounding your firm. I hoped that through these backstories I could provided a small measure of solace to some. Yet the end of a year is a time for reflections, and I would like to share mine.
Foremost among my thoughts is how badly I feel for the shareholders of OSTK who had a tumultuous and, in the end, disappointing ride in 2019. I feel horribly for them. Anything I might say beyond that sounds defensive. So I will stop there for a moment, simply to reiterate that point: I feel terribly for what happened this year. Like others, I thought you would be riding a stock many multiples of its current valuation by now.
Having said that, I will bring some additional thoughts to your attention.
- By no means whatsoever should you give up hope for the firm.
- The killer app of the blockchain revolution is security tokens. You have seen my calculation that the industry of security token exchanges may be worth a lot. It may be like owning the Google Search Algorithm in 1995. tZERO not only has a commanding lead, as far as I can tell, most of the competition in this field is fading, and tZERO’s lead is lengthening.
- The other blockchain assets are among the premier in the world. MLG, for example: if the work that is emerging in one African nation continues to evolve as planned, they have a business model they can pound all the way to heaven. And digital currencies are on the lips of every central banking from Beijing to Buenos Aires, and here Bitt has spent three years and millions of dollars working through the eneds of central bankers and building the first nation-staet level system (which, as I recall, goes live in Q1).
- The Retail business can be managed to return to a steady stream of positive cash flow. It has also provided a fecund environment from within which to develop those other blockchain assets, and the cash to support them as they enter commercialization in 2020.
- On the other hand, my departure could make possible strategic conversations that might have been chilled with me there. Time will tell and I have no information in that regard.
- The dividend Overstock created this year was a major event. Yes, the SEC derailed it (cf. “The SEC Cries ‘Bazoomba!’”) but it looks to me like Jonathan has teed it up again and has a clear path to success over the next 45-60 days short of another SEC “Bazoomba!” (although, of course, the point of the Bazoomba! story is that when the referee can change the rules mid-game, anything is possible)
- Having had nearly five months to reflect:
- I had secretly been hoping that my departure was not going to be necessary, but then it became necessary so I left. Yes there was Sturm-und-Drang about why it became necessary, and yes hedge funds guys like Cohodes (and others) were directly calling directors and executives to convince them to force me out so the stock would reprice from $20 to $50 (we even had an analyst or two suggest it). Thus, it is tempting for me to connect dots from across the summer to try to piece together who was in on what and why precisely why it played out as it did, but in the end there was no bad faith on the part of directors or colleagues or analysts. I think there was bad judgement, and maybe a recrudescence of politics that were one round too many for me, but at the end of the day I understand where everyone was coming from and can fault no one for it. All involved thought they were doing what was best for shareholders. And (I say with temper having cooled) perhaps it was something that did have to happen. I wish I had been able to play it out in my own way, and see, but that said, it may well have had to happen anyway. Withhold judgement a few more months before deciding.
- The hour I found out that while I had been navigating such difficult decisions not all those around me were being as straight as I might have hoped, I also learned that the board “was concerned about the optics of any connection with [me]” and demanded being “completely disassociated” from me. Instantly I decided to punch out. I was angry because I thought that over the course of the fall our stock might be $40 or $50 (“or $100!” if Cohodes could be believed), and that if I sold I might be getting half that. I was angry because I felt like I was having the rug pulled out from under me. I figured I was walking away with a good fortune but leaving behind a far bigger one to those who stayed and finished the story (and thus, to some degree, I was leaving behind the fruits of two decades’ work). That it has not worked out that way so far is a surprise to me. And of course I feel terrible for those who have been hurt by this.
So that was 2019. The Overstock team has come through a tough year. I am sure they are happy to have it behind them as well. They have risen to many challenges before, and have always done the hard things. They are superb, having come so far on so much less than everyone with whom they ever had to contend. Dave can handled anything Retail. Jonathan has the tiller and is really quite capable. They will be fine.
Maybe it was time, after all, that I got out of their way.