Patrick Byrne, CEO of Overstock, resigns after "extensive" comments

Dear shareholders,

In July, I met a small group of journalists about my involvement in some government affairs. It was not my first choice, but I remembered the damage done to our country for three years and I felt that my duty as a citizen prevented me from remaining silent any longer. So I introduced myself in the most meticulous and best managed way possible. The news that I have shared is bubbling (even randomly) in the audience. Although patriotic Americans write to support me, my presence can affect and complicate all kinds of business relationships, from insurability to strategic discussions regarding our retail activities. So, while I believe I have done what was necessary for the good of the country, for the good of the firm, I am in the sad situation of having to break the ties with Overstock, both as CEO and board member. , from Thursday, August 22nd. .

This possibility, or even this probability, has been in the foreground for a little over a year since some news was released in July 2018. On July 15 of this year, in the hope that I may have left before our recent call for results (August 8). , I wrote my most detailed letter to shareholders for a long time. Here are the key points of this letter that you should know as a shareholder:

1. I think the blockchain revolution will reshape key social institutions. We designed and breathed life into the most important blockchain keiretsu Worldwide, a network of blockchain companies seeking to revolutionize identity, land governance (= rule of law = potential = capital), central bank, capital markets, equity chains Supply and voting. In three of these areas (land governance, central bank and capital markets), the word "trillions" appears when calculating the disruptive opportunity of the blockchain. In these three areas, our descendants (Medici Land Governance, Bitt and tZERO, respectively) are arguably the main disruptors of the existing blockchain.
2. Retail
   We are facing a competitor who (by the end of the year) will have lost nearly $ 3 billion and who recently announced that he would seek to raise an additional $ 750 million, and who will be able to cover its expenses when the two lines of the graph intersect (see below right).
   After my unfortunate experience last year in copying the strategy of our competition, our retail business has returned to a positive adjusted EBITDA (cf.. graphic on the left).

   An excerpt of media accompanying this announcement is available by clicking on the image or link below:

   Leadership – We have the strongest retail management team we have ever had. Our ab initio The overhaul of our executive structure over the last year has led to a better integration of all the functions and to a good management of these functions that we have never achieved in our history.

   The director of marketing, JP Knab, is the greatest digital marketing master I've ever met. I will miss watching Commander Data find a new arbitration.

   Kamelia Aryfar is a computer scientist and renowned machine learning specialist. Dr. Aryfar started her career at Etsy. For the past two years, she has led the redesign of our machine learning business (by which we are 40% complete). .

   The integration of Skynet (Kamelia's name for its creation of artificial intelligence) continues in the areas of marketing and supply, and as it increases the number of shots taken. decision, we discover ways to generate continuous gains.

   In recognition of the importance that Machine Learning is starting to play in our world, Kamelia has been appointed executive vice president and has also been appointed to the board of directors of the company. She is an extraordinary asset to the firm and she will do great things for your shareholders in the future.

   Dave Nielsen is one of the few OG retailers I've ever come across to convert from jet to jet. He is as capable as possible and is widely admired within the company. He has already held the position of President and has contributed significantly to the drastic improvement of our net results this year. This is a real adult. He knows the mission is to continue to provide the necessary space and resources for Kamelia, JP, and others to continue to make these tens of millions of dollars in retail net profit improvements by putting money on the table. focus on turning our retail site into technology and leaving the site. billions of losses to others.

   Over the last three years, Jonathan Johnson has done a tremendous job transforming a mix of entrepreneurs, thesis writers and your capital into a great company. keiretsu well-formed blockchain companies around the world. He has proven to be an extremely capable partner who takes advantage of the vision. I am pleased that he is the CEO of your entire public company. You could not have a more stable and cautious leader. The reason we have been such good partners is that Jonathan is the exact opposite of me in many ways. No doubt that this can be welcome in some circles. He has the keiretsu, he has the road map, he understands that the goal is to feed the keiretsu all its potential, while allowing the retail business to focus all its efforts on technological perfection rather than on the accumulation of losses.

3. Strategically:

   We removed the pistol from our temple. I think that in the near future, the revenues generated by Retail should be sufficient to fund Retail's ongoing innovation (we've picked up the Machine Learning wave all the time and have a leading team that reinvents society from the point of view of BC). and nurture our mature keiretsu blockchain companies, in particular tZERO, Medici Land Governance and Bitt (as well as Voatz, too), in particular because of the possibility of reducing their expenditure, either through external investment or the fact that their products (for example, tZERO & # 39; s) arrive on the market.

   Retail:

   In discussions with the bricks and mortars of last year, when we filled their models with our data, we generally discovered that, if we were part of a brick-and-mortar chain having a footprint national, there could be 200 USD. millions of annual savings (mainly but not exclusively in logistics). On the other hand, if they are associated with some sites with heavy traffic but have not solved the problem of monetization, the models have shown that, combined with us, savings of 150 to 200 million dollars could be realized.

   In the absence of such a hybrid, I think that by continuing to improve our supply chain, we can find $ 40 million of these savings on our own savings of 12 to 18 month. We introduced advertising technology this summer, which will generate (I believe) an equally attractive number over the same period. Therefore, assuming that Retail earns $ 115 million to $ 120 million this year (our range of estimates), expect it to realize tens of millions of dollars in net profit improvements. seems reasonable.

   As you know, I think that the gods of the economy believe that such a hybridization of business models must be realized. This could take different forms, ranging from cooperation partnerships with a brick and mortar to an acquisition (for an ambitious fund, the ultimate form could be a stack of three layers and a recovery of about $ 300 million of funds to establish something d & # 39; unique).

   Collectively – The best thing to do for the shareholders' interest is to use the cash flow to ripen our blockchain. keiretsu companies to realize while we continue to manage our retail business focusing on refining as an exquisite gem of a technological platformrather than trying again to compete with a company losing billions of dollars in losses. The refinement of this technological gem is what brings value to the bricks and mortars for which we represent a way to position themselves technologically in the foreground. If the right strategic offer reflecting the value of this technological gem is proposed, I am convinced that the board will take it into account. It is possible that my absence advances the possibility.

   Mostly Ordinary my presence is not conducive to strategic discussions about our retail business. I believe that to go forward before my presence will be definitely not be conducive to such strategic discussions. And if the hors d & # 39; work Such indigestion has been caused recently by the market. It will not be in the shareholders' interest for me to be present if and when a main course is served.

It has been an honor to serve you through the thorns, the grandiose and mysterious threats, for 20 years. You own disruptive assets in these terms. One of them has changed the way furniture is purchased in the United States and has recorded a record number of profitable years under GAAP, which is virtually unrivaled in B2C eCommerce , on a fraction of the capital of each competitor they have faced (a fact missed by most). And you have blockchain assets that seem ready to revolutionize capital markets, finance, and governance for the poor. It's 20 years of remarkable innovation from a team that is now refined.

Communicating publicly about my involvement in other issues was not my first choice. But for three years, I see my country fall apart while knowing many answers, and I put the limit in the red face the outbreak of civil violence. My rabbi made me understand that "going forward" meant telling the truth to the public (not just the government). I am now planning to leave things to the highly esteemed Department of Justice (which I have probably already irritated enough by becoming public) and to make them disappear for a while.

I wish all shareholders a smooth and level road … And do not forget to shop on Overstock.com!

Your humble servant,
Patrick M. Byrne