New Overstock CEO Jonathan Johnson weighs in on Patrick Byrne leaving, future of company
Jonathan Johnson spoke with the Deseret News about his years as Patrick Byrne’s leading lieutenant and how to return Overstock back on the path to profitability.
MIDVALE — Jonathan Johnson, one-time Utah gubernatorial candidate and 17-year veteran of Overstock.com — and the man who led the company through its most profitable years — is once again at the helm of the e-commerce retailer and taking the first steps down a path that for the first time in 20 years will not include the company’s mercurial figurehead, Patrick Byrne.
Over his time with Overstock, Johnson has served variously as the company’s chief counsel, president and, for the past several years, as the head of its blockchain-focused investment subsidiary, Medici Ventures.
Byrne stepped away Aug. 22 from Overstock, the company he purchased for $7 million in 1999, renamed and rebuilt into one of the original online retail giants. His resignation followed days of headlines focusing on his claims of working surreptitiously on multiple occasions for federal law enforcers and having a relationship with Marina Butina, a Russian national currently serving an 18-month sentence for failing to register as a foreign agent.
Johnson spoke with the Deseret News recently about his years as Byrne’s leading lieutenant and how to get Overstock, a company that’s been challenged by the highly competitive and fast-evolving world of online retail, back on the path to profitability.
Editor’s note: This interview has been edited for length and clarity.
Jonathan Johnson: Patrick, in the past, has been a whistleblower on Wall Street, and people went to jail. I would characterize this as whistleblowing again, but on the federal government. Following that, he decided to step aside permanently from Overstock ... and following that, the board appointed me as interim CEO, but I believe it will be a permanent position.
DN: For the last couple of years, numerous reports indicated Overstock was for sale. Is that still the case and, if not, what do the next steps look like?
JJ: To clarify, the Overstock retail business was for sale and there is still an investment banker engaged. However, the retail business is doing well now ... and the board is not looking for a fire sale. We like what we’re seeing on the retail side.
DN: E-commerce has evolved dramatically since Overstock debuted in 1999 and the sector is rife with competitors now. Where does Overstock fit into the current online retail market?
JJ: In 1999, e-commerce was a nascent industry without a doubt. In 2019, it is a much more mature market with numerous bigger players. Overstock has found a great niche focusing on home goods ... and the business has turned around in the last quarter. There is certainly a place in the market for Overstock to grow and thrive, be profitable and generate positive cash flow. We see a bright future for retail.
DN: Medici Ventures, Overstock’s blockchain-focused investment subsidiary, was launched with extensive funding from the retail side’s coffers. When you’re talking about growth for the company, do you see that mainly flowing from Medici’s companies as they bring products to market, or from the retail business?
JJ: I see strong growth on both sides, but the potential for exponential growth is in the blockchain companies. One of the companies, Voatz, was just used in Utah County’s primary election (last) month. And, tZero (a blockchain-based trading platform) now has its token platform up and running with digitized shares trading there and a crypto wallet in play. Many of the (18 currently) companies in the portfolio now have products in, or nearing, production. Overstock has put a little bit over $200 million into blockchain, but that amount will slow now that the companies are more mature.
DN: Clearly, the market reacted to Byrne’s public statements about an alleged “deep state,” his relationship with Butina and other issues. But how are Overstock’s employees handling the events that led to his resignation?
JJ: Any time a founder who has been there for two decades leaves, there’s a tremor and Thursday (Aug. 22) was a surprising day. People love Patrick and tears were shed. By the time Monday morning came around though, people were focused on their jobs. They know it’s time to prove their company stands strong after separation from a very charismatic leader.
DN: It’s been some years since you were at the helm of the retail business. How does it feel moving back into the spot, particularly with Byrne no longer part of that team?
JJ: As Patrick’s longtime colleague, he and I have worked to set the vision for this company and to build on that vision. For years, Patrick was the architect of the company, and I was the builder, but not just one who followed plans others gave him.
DN: The market had a strong reaction to the news surrounding Byrne’s claims, and Overstock’s stock saw a 30% drop over just a few days, but came back about 9% following Byrne’s resignation. How fast do you expect further reaction to the new leadership?
JJ: There was fallout from what Patrick has been talking about and that’s had an effect on the stock price. But going forward the stock price will be driven by the performance of myself and the executive team. When the company became profitable in 2009 and had seven years of profit, I was the president. I think the market is going to watch that quarter over quarter, and I think some of the peripheral stories around Overstock will be less and less.
DN: You’ve worked with Byrne for almost the entirety of Overstock’s existence. Were there any conversations before last week’s happenings that foreshadowed his resignation?
JJ: The short answer to that is yes. Patrick has talked at various times in the last decade or more about turning to the next chapter in his life. He and the board have had regular discussions and no one was caught flat-footed. In the recent weeks he’d talked more to me and the board about this but until it actually happens ... we knew that he’d been thinking about it.
DN: Any idea what Byrne’s next steps may look like?
JJ: I think the immediate next chapter is on a beach somewhere, probably next to a tall stack of books. I think he has this great ability. He was a college professor before he came to Overstock, and I could see him doing that again. I could see him running another business, perhaps, but 20 years building a company into a juggernaut ... some people say once is enough. I could also seem him going to work for a company that is changing the world ... or doing something that really advances humanity.