Dr. Patrick M. Byrne is chairman and CEO of Overstock.com, Inc., a Utah-based Internet retailer that has been publicly traded since 2002. Under Byrne’s leadership, the company’s revenue soared from $1.8 million in 1999 to $760.2 million in 2007. Before founding Overstock.com, Byrne served as chairman, president, and CEO of Centricut, LLC, and held the same three positions at Fechheimer Brothers, Inc., a Berkshire Hathaway company. He holds a bachelor’s degree from Dartmouth College in philosophy and Asian studies, a master’s degree in philosophy from Cambridge University as a Marshall scholar, and a doctorate in philosophy from Stanford University.
SM: Patrick, first tell me about you. What is your background? Where does your story begin?
PB: I was born in Indiana. We moved to Massachusetts when I was two, so I grew up in New England. I went to Dartmouth, Cambridge, and Stanford. My career has been split between academia and business. Early on I was one of those guys who did some small business ventures while I pursued a full-time career as an academic. I did that until the split between the business and academic worlds grew too large. In 1994, I made what I expected to be a six-month, full-time switch to the business world.
SM: Where were you pursuing academia?
PB: I did my doctorate at Stanford in philosophy with a heavy orientation towards law and economics.
SM: What were you doing on the business side that was exposing this conflict?
PB: At the time I had led a group of investors into buying a small manufacturing company in New Hampshire. Shortly after we bought that, the CEO had to retire suddenly. I had to step into his shoes while we looked for a new CEO. I thought that would take three to six months. Unfortunately, ever since then it has been like Al Pacino in “The Godfather 3;” anytime I start to get out they suck me back in.
SM: What kind of manufacturing company was it?
PB: It was called Centricut and it made consumable tips for industrial torches. Anything made out of metal begins with big metal plates which get cut into different shapes and welded together. Plasma torches are used to cut those metal plates which have tips that burn out every hour. They are a very high margin, 70% to 80%, product. We basically got into the razor blade business. We let other people sell the razor, we just made the razor blade.
SM: In 1994 you went off to run the company temporarily. What happened next?
PB: I was there for three years when Mr. Buffett had a rare lapse in judgment and asked me to come work for him. Mr. Buffett has been a great teacher to me throughout my life. I met him when I was 13. Back then he was not Warren Buffett the historical figure, he was just Warren Buffett. My father went to work for GEICO, and Warren Buffett bought a fair share of that company. When he came to Washington, DC, he would occasionally come to our house and even stayed with us a couple of times.
He is super generous, and he is one of the greatest teachers you could ever imagine. I always knew when he was coming because my parents would get a case of Pepsi. They would let me skip school and we would drink that case in two days. He had a hip flask which had cherry syrup in. He would pour cherry syrup into the Pepsi and drink it. When Coca-Cola came out with Cherry Coke, that turned the world around. As I look back, I realize that over the course of a half a dozen conversations held in my teenage years, the whole course of my intellectual development was shaped.
SM: What role did you have when you worked for Mr. Buffett?
PB: In 1997, he asked me to come work for him running a group of apparel manufacturing companies. I thought that it would also be a three- to six-month assignment. That turned into a two-month assignment, and then I retired. I thought I was done with business for good, and I went back to teaching. I went to Dartmouth and took a group of students to China for a semester.
SM: Was your assignment for Mr. Buffett so insanely lucrative that it led to your retirement?
PB: It was intellectually lucrative, not necessarily financially lucrative. I had led 20 different investment packages and had built my own investment company in the late ‘80s and early ‘90s. That manufacturing company stint was the last of a chain of a couple of dozen business deals. At that point, I was ready to retire and teach.