David and Tom Gardner recently interviewedOverstock.com
TMF: You have been very forthcoming about your company, talking about its strengths and weaknesses in your previous appearance. We commended your candor; we called it "refreshing." Certainly candor can be attractive to investors, especially those who have been burned by some bad criminal CEOs in the past few years. But your style does have its critics, as you identified in a recent interview with Fortune Magazine. You said, "Cynics claim that my candor is but an attempt to pump my stock by drawing investors looking for someone who does not pump his stock." You went on to say, "I am flattered to have attributed to me such Machiavellian subtleties."
Byrne: I have gone really out of my way to do something not many presidents do, which is I say, "Hey this stuff is going well with the company, and this other stuff isn't. And this is what we are working on." Well, as your fellow, Bill Mann has written, we live in a day when things are going well, CEOs say, "Everything is super-de-dooper," and when things are going awfully, they say, "Well, everything is just super-dooper." I am out there not trying to do either. I am just saying, "Hey, this stuff is working out; this stuff isn't. We are going to focus on that."
In today's era, because of that climate, when you do have that kind of candor, people think that there is some hidden message. I wonder how long I have to be like this before people understand that when I say "X" I really just mean "X." I am not trying anything; there are no hidden messages or anything.
Suppose you have a pretty good quarter and you want to say that "Hey, something was pretty good; it was a B-plus. And something else was a C and we're going to work now on fixing C." That is truth. What Wall Street wants you to say is, "This was an A-plus, that was an A-plus. I did great here and I did great there." If you do that, your stock goes up. If you just come out and say, "Actually I think we did pretty good here, a B-plus." People think that it must really be an F because the only time a CEO gives himself a B-plus is when something is a disaster. So it is a self-fulfilling thing that just gets worse and worse.
Here is a good example. Two quarters ago, we missed our earnings expectation by a penny. Well, a penny for us is about $150,000. We could, in a company of our size, milk a little reserve. We could have gotten that $150,000 anywhere. It would be unthinkable. Not only wouldn't we do it, no one would ever propose it to me... no one. An accountant at our company who proposed that would know he would lose his job on the spot and they are not the type of guys who would propose it.
So we announced our earnings and we missed by a penny. I had phone calls saying, "I can't believe you. Couldn't you just have adjusted this reserve or done this with that and made your earnings?" It's like, I can't believe you have the gall to even tell me that, and we get these kinds of calls all the time. People trying to tell us how we can pump our stock. You shouldn't say this, you should say... I say, "Fella, you don't get it. We are not playing these games. We are just trying to play this down the middle of the fairway. I was really hoping that by now we had won a bit of credit. I don't care about recognition as much as I care that there are some smart investors out there who say, "Gee, it is nice to have a guy who is going to play the game straight." There are half a dozen, but most of the people I think just think I am an idiot and I don't get how you play the game.
TMF: You have to be one of the motliest people we have had on the program. You have worked as a boxer. You hold a PhD in philosophy. You have biked across our country multiple times. You have survived three rounds with cancer. What is something about you that might surprise us?
Byrne: I decided when I was sick, when I had cancer... of course I didn't know if I was going to get better or not, and then there were brief periods when I was out of the hospital and I started thinking, "If I am just going to assume I am around for about three to six months more, what would I do if I knew today, if God whispered in my ear, "You are going to be around six months." Then I started living my life that way and it was kind of hard to break the habit. I realized about ten years later that not only was I still viewing my life that way, but it is probably a good thing. Because if every day you wake up saying, "If I only had six months left to live, what would I do today," someday you are going to be right. In the meantime, you are not going to spend a bunch of time watching TV.
Tomorrow: Byrne rates the competition.