As Jonathan Johnson III headed Thursday to his first meet-and-greet with employees at Overstock.com since becoming its interim CEO, he was signaling a return to basics after the tumultuous exit of the company’s founder.
Patrick Byrne, 56, resigned as head of the Midvale-based online retailer Aug. 22 after acknowledging he’d had an intimate relationship with Maria Butina, convicted as a Russian agent, while he acted as a confidential informant to the FBI.
His claims of being an unwitting part of what Byrne called a “Deep State conspiracy” led by a “hijacked” FBI dealt a blow to Midvale-based Overstock, considered a mainstay of Utah’s high-profile technology sector. The remarks sent company share prices into a 39% decline, before they rebounded when he announced his resignation.
In spite of that turbulence, Johnson told The Salt Lake Tribune he viewed Byrne’s departure as an endorsement of Overstock’s business prospects.
“Patrick’s leaving is a vote of confidence in the business and in the team we have here,” the 17-year Overstock employee said in an interview. After pouring his energies and passion into the online shopping site for two decades, Byrne “would not have left if he thought his departure would hurt the company.
“He's certainly not trying to jump ship,” Johnson said. “He's the kind of guy who would go down with the ship, were the ship going down. And it's not.”
The company has faced stiff competition in recent years from e-commerce firms such as Wayfair, which also specializes in home goods, as well as the online retail sector’s behemoth, Amazon.
Johnson takes the Overstock helm after serving as president of Medici Ventures, an Overstock subsidiary focused on investing in blockchain innovations. Byrne has heralded the digital ledger technology, which underpins cryptocurrencies such as Bitcoin and Ethereum, as Overstock’s future.
He “is convinced that the technology will disrupt Wall Street and commerce,” one company analyst wrote in March. “Simply put: Blockchain is the future in the eyes of Byrne and Overstock is the past.”
Johnson said that is a little unfair. “Patrick loved both the retail business and the blockchain business like a parent loves each of her children.”
That said, Johnson added he, too, is “a believer” in blockchain. “If Patrick was our most charismatic spokesman,” he said, “I am probably our most enthusiastic spokesman on the blockchain's future.”
But Johnson said Overstock isn’t playing favorites and is ultimately a technology firm. Its executives are deploying cutting-edge machine learning and artificial intelligence on the firm’s retail side, he said, as they simultaneously develop as many as 18 separate firms devoted to the disruptive potential of blockchain.
Undergirding Overstock’s blockchain companies, Johnson said, is an impressive talent pool of up to 200 “enterprise-grade, blockchain-focused developers,” mostly based in Utah.
“Patrick and I have frequently said we don’t think Overstock could have been built anywhere other than Utah, given the tech-savvy talent that’s here,” he said.
One of Overstock’s blockchain companies, called tZero — which offers a blockchain-based platform for trading in capital markets, including cryptocurrencies — is described in Overstock company documents as “a crown jewel.”
“Those have the ability to frankly dwarf the retail business if we can help them realize their promise,” Johnson said.
But for now, Overstock returned its retail side to profitability this year after several consecutive quarters of losses, reflecting a strategy that Johnson called "sticking to our knitting.”
“In 2018, we tried something that was different than what has been in our DNA and that was to spend to grow,” the interim CEO said. “But part of our ethos is to make money for the company. And when that growth came at a cost of losses, we decided that it's just not who we are, so we went back to who we are.”
Short term, he said the company hopes retail profits can pay both for further retail growth as well as Overstock’s blockchain investments.
But, Johnson said, if someone offered to buy Overstock’s retail operations, “we would not take a fire sale price, but if it was an offer that made sense to the board, we’d certainly consider it.”
“The ‘For Sale’ sign is not out on the front lawn like it had been earlier,” said Johnson, “but we still have a banker, like most public companies do.”