Patrick Byrne, CEO of Overstock.com, is not the typical multi-million dollar businessman.
He ‘s out to save the world.
“I’ve always felt that stereotype [of businessmen] is not fair. But my priorities changed after my fight with cancer after college,” Byrne said.
On Sep. 24, he created Worldstock Socially Responsible Goods, a part of Overstock.com. The purpose of Worldstock is to sell the work of disadvantaged artists through Overstock.com for significantly less money than importers. Byrne limited himself to a 5 percent profit margin.
So far, the business is doing well.
“[Worldstock] made $80,000 in the first month, which is how much Overstock.com made in its first month. This past month, Overstock.com made $8 million,” he said. He projected sales for December to be $15 million.
At the instructor’s invitation, Byrne spoke to Adjunct Professor Robin Robison’s Management 3500 class in the Christensen Center Thursday.
Overstock.com is an Internet business that sells excess inventory to shoppers. He discussed the business model of Overstock.com and what makes a successful business.
He said entrepreneurs must follow the teachings of legendary investor Warren Buffett and ignore what the business market says.
He compared the market to a manic-depressive partner of a barbershop.
“One day, your partner will walk in and think that cutting hair is the best job ever, and he’ll offer to buy your half of the business for a lot more than it’s worth,” he said. “The next day, he’ll come in and think it’s the worst business ever and try to convince you to sell. You’ve got to learn to ignore the market.”
By ignoring the market, Byrne was able to create Overstock.com.
Byrne realized that companies have a huge problem with excess inventory. However, venture capitalists in Silicon Valley didn’t see it the same way.
“I had to be the only guy walking around Silicon Valley in 1999 not getting any money,” he said.
He was, however, able to obtain enough capital to start Overstock.com.
Now, Overstock.com has one fourth the amount of visitors as Amazon.com, but Amazon.com had 100 times what Byrne spent on start-up capital.
“The ironic thing is that we’ve liquidated some of the dot com’s that did get venture capital when we couldn’t,” Byrne said.
Overstock.com also helps “mom and pop” businesses, because it is set up so small business owners can purchase Byrne’s inventory and sell them to their own customers.
“We’re the first dynamic that reverses the effects of Walmart. We’re helping keep small businesses alive,” he said.
Overstock.com is a “countercyclical” business, which means when the economy is down, business is up for Overstock.com.
“Right now, our business is booming,” Byrne said.