Patrick Byrne: Settling the score for the common person
What can be said about the unorthodox Overstock.com CEO, Patrick Byrne? Not usually one for attributing personality traits to a person based on their name, nonetheless I looked up the origins of the surname Byrne. Maybe it’s the approach of St. Patrick’s Day, or a feeling of kinship prompting a bout of nostalgia, I don’t know. I digress a little, but I have a point, I promise. Most Irish surnames have a family motto, and for Patrick Byrne, it could not be more apt: Certavi et vici. Translation: I have fought and conquered.
Battle-scars of a Crusader
Scrape the very surface of Patrick Byrne’s past and a myriad of battles, fought and won or ongoing are revealed. In his personal life, Byrne has battled cancer 3 times, and fought back from the brink of death at least once. This man has a strength of character to be reckoned with. Even the grim reaper has failed to steer Patrick Byrne off his chosen course.
On a more professional level, Byrne has spent 10 years squaring up to the wolves of Wall Street, journalists, analysts and banking cartels alike, all in a bid to erase the corruption and manipulation of the current financial system. This is despite, or maybe because he runs a company that is publicly traded on Wall Street. No mean feat you might say. You might even question how one single figure could try to take on so many and hope to win. The task is too big for one alone. That may be true, but that’s how he started, alone. However, over the years, Byrne has built a trusted network of colleagues, who, like him, will not be swayed from their path.
He has both seen the the “zombie apocalypse” (his personal term for the next great recession) coming and warned those he can of its impending arrival. More than that, he has shared his belief that bitcoin may be able to help staunch the bloodflow when the zombies start biting.
“Someday, either zombies walk the Earth or something close to that. Bitcoin is the solution.”
How the battles began
Overstock.com was launched in 1999, selling clearance, overstocked and discounted goods online. Byrne was a well respected pedigree. His father, Jack Byrne, built the GEICO insurance empire and he spent many an afternoon with his “Dutch Uncle”, business magnate, Warren Buffet, in his youth. In 2002 Overstock.com went public, using a method called a “Dutch auction” that typically stops the big banks from taking their standard mega-cut of the IPO, thus limiting their control over the company. Clever. The fires were fueled further when, in 2006, after months of torment, Byrne accused a “Miscreants Ball” of players on Wall Street of stock market manipulation. On a call to reporters and investors alike, he accused these players of driving a campaign to exploit a loophole in the stock settlement system, making millions of dollars at the expense of unsuspecting companies like Overstock.com. Those accused of this underhanded behavior included hedge fund managers, trial lawyers, financial analysts, government regulators and even the press. Byrne went further still, and claimed there was one person at the helm of this operation, a person he dubbed the “Sith Lord”.
In a nutshell the loophole surrounded naked short selling, where shares are sold but never delivered. It is a purposeful act of manipulation and can be used to drive down stock prices. The spotlight was shone on them all for this, and in turn, Byrne felt their wrath. The press in particular took great pleasure in ridiculing Byrne at every available opportunity. The “Sith Lord call” , thought personally considered Byrne’s finest hour, became grossly distorted by the media, leading to the loss of respect for Byrne, who some then brush aside as a conspiracy theorist and quack. Overstock.com was subjected to 5 investigations by the SEC and Byrne even received death threats, if he didn’t abandon his Wall Street crusade.
But Byrne persevered.
The effects of persistence
Coming to the realization that the press were maliciously trying to targeting and discredit him, Byrne decided to create his own press company, Deep Capture. Staffed by his own team of trusted journalists, these guys would fight back for the cause. Former Business Week writer, Gary Weiss, had long been suspected of controlling the Wikipedia pages used to tarnish Byrne’s name. The team at Deep Capture eventually proved their suspicions were correct, and had Weiss removed from the site. Byrne himself was vindicated.
Following the crash of Bear Sterns and Lehman Brothers in 2008, the SEC released an order to halt the use of naked short selling tactics. The very thing Byrne had fought for and warned against. Again he was proven correct.
“Patrick Byrne was pilloried in the press, who made him look like a conspiracy-mongering lunatic. But sometimes, even conspiracy-mongering lunatics are right.” -James Angel, Finance Professor at Georgetown University
Despite the negativity, scathing onslaughts and the death threats he suffered, Byrne remained true to and unwavering in his convictions. Today, Overstock.com is still locked in a lawsuit, having accused Goldman Sachs and Merrill Lynch of operating a “massive, illegal stock market manipulation scheme.” Seven years on he is still forcing these mega investment banks to account for their actions and try to prove him wrong.
Whatever ill treatment Patrick Byrne received personally, he has still managed to take a near bankrupt flea market company and turn it into a billion dollar success story. This feat just goes to show how far determination can get a person.
What about Bitcoin?
Believing something will succeed is often half the battle when it comes to an eventual success story. Right now the bitcoin community shares this belief in bitcoin. But for bitcoin to succeed long term, it’s those outside the community, companies like Overstock.com, Ebay and Amazon need to share that belief. The acceptance of bitcoin by Overstock.com was a turning point for bitcoin, one of the first major, well known businesses to start accepting bitcoin. Not just a startup by someone within the bitcoin community looking to sell goods for bitcoin, but an “outsider”, understanding the potential for bitcoin and willing to take a risk on it. As a libertarian and philosopher, Byrne’s opinion of bitcoin is that it:
“was like my dream come true.”
Some may argue that makes Byrne a member of the bitcoin community. I would argue anyone who understands and appreciates bitcoin can be part of the community, it’s very welcoming and inclusive. But not everyone would tie their business to bitcoin or convert millions of their personal capital into bitcoins, especially in such a volatile market. What he did was adapt an existing successful company to bitcoin, not build a company around bitcoin. There’s the distinction for those looking for one.
From the get go Byrne estimated that 1% of their sales for 2014 would be in bitcoin and to date Overstock.com is bang on track, with 0.83%. On the first day alone Overstock.com raked in approximately $124,000 worth of bitcoin sales, in the first 21 hours.
— Patrick Byrne (@OverstockCEO) January 10, 2014
After the initial buzz calmed down, this has settled at around $20,ooo – $30,000 in bitcoin sales daily. Breaking down the figures further, roughly $30,000 of the $3.6 million average daily revenue provides the current figure of 0.83%.
Though this may appear low, we must remember bitcoin is in its infancy and approximately half of all mined bitcoins are currently in the hands of less than 1000 individuals. This fact alone decreases the pool of those currently in a position to buy with bitcoins significantly. But, the bitcoin network is growing by the day and as more get involved, we can expect to see the number of bitcoin purchases here, and elsewhere online, increase.
What’s more important for the future of bitcoin?
It’s hard to say what is more important to bitcoin at the moment, the support of Overstock.com or the support of it’s CEO Patrick Byrne. On one hand there is a respected business, reaching out into a potentially untapped community, providing invaluable exposure for bitcoin in day to day purchase activities. This would effectively normalize the idea of making purchases with bitcoin and encourage those who are clueless to become clued in. Bitcoin needs this. However, on the other hand we have a man, ridiculed by some, understood as a voice of reason by many, steadfast in his faith, no matter the personal cost. This guy has taken on giants, and won. He has the ability to see through what he has been told and ascertain the likely outcome. He saw the recession coming and he sees the potential of bitcoin for what it truly is too.
Byrne himself predicted that by Overstock.com adopting bitcoin, other big names would follow suit. So far he is proving himself right. Ebay have recently filed patents for a bitcoin exchanger, on the QT, suggesting they are getting ready to start accepting bitcoin for transactions. With a Q4 revenue of over $4.5 billion dollars, compared to Overstock.com’s quarterly average of $326 million, a 1% adoption rate in ebay purchases would do wonders for bitcoin to say the least. Longer term however, Byrne hopes the bitcoin network, with it’s trust-negating features and overall transparency, will reshape the very design of Wall Street and bring his long battle to close the exploitative loopholes of the stock market to an end.
What is it they say about the “Fighting Irish?” American now perhaps, but the spirit sticks with the name and lives on through the generations. Patrick Bryne embodies that fighting spirit. With people like Patrick Byrne and Overstock.com championing bitcoin, the only way is up.