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Overstock Has Had a Wild Week (bloomberg.com)
150 points by kgwgk 27 days ago | hide | past | web | favorite | 88 comments



What an amazing read... this is absolutely wild. The whole South America angle reminds me of the John McAfee saga...

Also, at this rate, we might as well have a bot that automatically submits Matt Levine's column to HN!



I subscribe to the email versions of his articles. I highly recommend them, entertaining, informative, and I feel he remains fairly neutral, which is a welcome relief in this day and age.


I like his writing, but there's something about it that's just too time consuming, day to day. Maybe it's my own short attention span.


I’ve tried to cut out all the small nonsense (except HN of course...). And that really leaves time for a small few longer reads a day, and I find it to be much richer consumption overall. But then I’ve got 30+ tabs open that I’ll probs never get to


I could definitely see reading a weekly highlights, just that it's too much for me every day. There's something about the writing style too that feels a bit breezy at times.


It's your attention span. I have the same impression as you. I don't always read the articles, yet whenever I do "find the time", they're always an entertaining and insightful read.

Which means I think I need to work on my own attention span.


I used to work at Overstock as an engineer. It was a wild ride. This guy is explaining this situation better than any combination of people in that company could ever muster up. Also, AMA, there are plenty of stories.


I did a software engineering internship at Overstock circa 2013-2014, and have a couple interesting stories myself.

However while an intern there I heard a story that Patrick Byrne locked a team of engineers in a room and didn't let them out until they implemented bitcoin payments into Overstock. Do you happen to know if this story is true? I remember at the time that made Overstock one of the first bigger mainstream websites to support Bitcoin.


It's not precisely true but that story comes from him and it's not too far off.

He loved talking about "throwing a bunch of engineers in a room for a couple days and shoving pizza under the door periodically" for that implementation, and they basically did do that, but it was nothing more intense than a normal crunch time overnighter or like a hackathon, and of course they could've gone home if they wanted to. I knew them and most of them were pretty stoked on the project so they kinda wanted to do that anyway, and got a hell of a bonus for it too (and promotions, lots of them).


I'm not even sure where to start asking. What's the first wild story that comes to mind?


I was pretty good buddies with some of the higher-ups that spent a lot of time with Patrick. One of the craziest stories they told me was when they were partying at his ranch in the mountains with a lot of property.

Everyone was drinking and laughing or whatever, I think he estimated a handful people were there, and suddenly Patrick gets a notification on his phone and starts freaking out, saying someone was coming onto the property, specifically one of the "men in black" Feds you hear him refer to. Apparently he had people watching cameras around his property for any "suspicious activity," and there were reasons for him to fear for his life over it.

He pushes a button and his house shuts down like one of those movies where metal sheets go over all the windows, code red alarm, and literally a gun room opens up. He grabs a bunch of "Halo-style guns" (source's words) and passes them around to the other people in the room, whispering about hiding and waiting it out or they'll have to fight.

Hours went by without more incident other than everyone freaking out for a while and I think they started partying again or passing out.

People didn't used to believe me when I told them he was like this!


Were you around for the Bing partnership days? If so I have so many questions.


How wild was the company overall vs just Byrne?


Matt Levine is a national treasure and he's at his best here. The WeWork post below is hilarious too but my favorites are when he picks really obscure topics and makes them both understandable and funny while adding some subtle insights.


Matt Levine is the only reason I have a subscription to Bloomberg. He does great work.


You can get Money Stuff emailed to you for free. If they stop that, I will have to break down and get Bloomberg news.



Awesome, thanks!


Outline / readable: https://outline.com/kr9djp


Just a heads up that you can get the column free if you subscribe to it as an email newsletter.


Awesome! However:

> The crypto is stored in the place where all crypto is stored: in mathematical mist, behind long keys held only in the memory of someone who is quite good at storing such things in memory (with paper backups in the hands of a priest I met 35 years ago who never sets foot in the West).

That could be pretty bad news for the priest, whose identity and whereabouts could surely be ascertained by a sufficiently motivated criminal actor, and it sounds like there are tens of millions of motivational units in play.


I’m pretty sure this priest does not exist.


Perhaps he means "priest" figuratively. Like how The Keepers of Lists were visually portrayed as monks.


Byrne calls Buffet his Rabbi... Therefore someone else referred to as a Priest seems less far-fetched, to me.


Whether or not there's a priest, he just might manage this, if he's clever enough.

But unless he's been getting seriously technical, that's unlikely.


Basically, Byrnes is looking like a duck, quacking like a duck, and swimming like a duck. I can't see the SEC sitting this one out.

How soon until Overstock throws Byrnes under the bus too? They made the decision to make the dividend tradable day 1, after Byrnes left, as more sane leadership took control.

Also, Adam Neumann took out a ton of private loans using private We stock as collateral. What happens if the IPO busts?


I don't get how the author claims that removing the trade restriction on these digital shares removes the market manipulation angle. The short squeeze already happened! The market was already manipulated!


Right? That's precisely why I think the SEC is hiding in the duck blind, watching Byrnes unravel and waiting for the right moment to pull the trigger.


I can understand that Overstock might claim that the market manipulation issue has been resolved by getting rid of the trade restriction. But I don't understand why anyone else would think so too.


I don't know. I honestly could see an argument that he's just not mentally stable, he may sincerely believe a lot of what he's saying and not trying to manipulate the market.

His language and mannerisms remind me of a high functioning paranoid.

He also just doesn't strike me as a criminal operator, more of a lunatic.

I wonder what impact the mental capacity has on SEC charges?


> I will say that the strategy of declaring a dividend in nontransferable magic beans to hose short sellers is, on its face, too easy. If this works, and if you can do it with the pure goal of messing with short sellers, then lots of companies would do it.

I think a fair number of CEOs would love to see this work.


>It may give you some comfort to know what I am doing with the capital generated by the sale of my stock: after paying tens of millions in taxes (after all, “We didn’t build that,” right?) by Friday the rest will be in investments that are counter-cyclical to the economy: Gold, silver, and two flavors of crypto. The gold and silver are stored outside of the United States, in Switzerland, and within two weeks, will be scattered in other locations that are even more outside of the reach of the Deep State, but are places that are safe for me. The crypto is stored in the place where all crypto is stored: in mathematical mist, behind long keys held only in the memory of someone who is quite good at storing such things in memory (with paper backups in the hands of a priest I met 35 years ago who never sits foot in the West).

He's giving away way too much information here. Maybe it's all false, in which case that's sort of ok, but he really needs to learn how to just STFU.


Can someone explain why short sellers would bother a CEO? Is it an ego thing, or does it actually hurt the company?


Very frequently top executives get substantial portions of discretionary compensation in the form of shares, restricted stock or options. So things which depress the stock price affect them personally. This is said to help create alignment between management and shareholders because management are shareholders. Short sellers have a vested interest in the price going down (they've backed that view with their cash by selling short after all) so their incentives are diametrically opposed to this.

Now, does the share price going down hurt a company? Somewhat, in that it's equity is less attractive so hiring people with options etc is going to be more expensive (people will value cash more) as will fundraising. Things like acquisitions become harder and more expensive too. But it honestly doesn't affect the company to the extent that would justify the obsessive attention that some CEOs seem to give it.

That all being said the classical view is that short sellers facilitate liquidity in a stock for when people want to buy and overall this should reduce volatility.

All of the above is assuming no market manipulation by the short seller (eg spreading malicious falsehoods about a company in an attempt to drive the share price down). This is something that is often alleged, but when you look at CEOs who say this, they frequently have the opposite tendency to positively spin things in order to send the stock price up.


Thanks for the explanation!


"Also—totally separate from all of this—Byrne left Overstock unexpectedly last month because he had dated and betrayed a Russian spy and wanted to make sure everybody knew about it."

"Really! Warren Buffett is somehow involved! Byrne blogged about it, on his blog, which is called DeepCapture.com."

(Quoted from his own blog post:) "The proximate cause of his decision to sell, however, came when we heard over the weekend that starting last Friday, the Deep State’s pets at the SEC began leaking something to their clients JPMorgan, Morgan Stanley, and Goldman (and here as citizens I bet you thought we were their clients, right? lol). They leaked that they were going to Bazoomba our digital dividend. Once that started getting back to me, I realized this: Whenever I have had any question about whether the SEC would or would not do something totally outrageous in order to hurt our company to benefit their clients on Wall Street, they never let me down: they always did the evil thing. So Pettway decided it was time to eject., especially because he knows I need the ammo to go to war against the Deep State."

I hope he gets the mental help he needs to get better.


If you’re going to call someone crazy then just come out and say it. Don’t quote the guy and then chime in with your fake compassion and hope that he gets the help he needs. That’s saying the guy is batshit crazy while trying to look like a good guy even though you probably aren’t qualified to make that determination. If anyone else commented “he’s f-ing nuts” they’d be downvoted because it contributes nothing. Somehow, yours is the top comment at the moment.


Agreed. You very clearly articulated why the OP's comment bothered me so much. It's an incredibly glib thing to say. Bryne for sure is atypical in his communication style and beliefs, but that doesn't necessarily mean he suffers from a 'mental' disorder.


I don't have a problem with suggesting that he sounds borderline psychotic/manic, because he does; what I don't like about the cliched comment about "getting help" is that there is, basically, no help. It's like cancer, there's all this activity and research and treatment that you're vaguely aware of if you haven't experienced it firsthand, but it amounts to barely statistically significant effects on symptoms with terrible side effects.


Yeah, it wasn't the crazy part that bothered me. It was the dismissive, condescending, passive aggressive tone while acting as if it's purely out of compassion. Plenty of people would choose not to engage this Byrne character based on statements he's made. Some might openly call him nuts and maybe someone else might think they're jerks for saying so instead of just leaving it alone. But at least own it instead of being insulting while pretending to care, as if that part excuses the insult. Personally, I think hearing what someone else has to say and then responding with, "you're clearly mentally ill, I hope you get the help you need" is such a shitty way to treat someone.


> I hope he gets the mental help he needs to get better.

It does sound weird, but on what basis can you or I claim to be better informed about that situation than he is?


[flagged]


The deep state is just the permanent bureaucracy that sticks around as presidents come and go. Those people run a lot of shit, and they have a lot of influence. Whether Byrne is being rational about this group is a whole separate question, but the "deep state" is a real thing. (And yes, the concept attracts a lot of conspiracy theories. However, some conspiracy theories turn out to be true, so we can't discount all of them without a merits-based examination of each hypothesis.)


Where I come from it's just called "government".

That not every public sector worker is replaced every four years is quite ok, it's how things continue to function over time.

If you use the phrase "deep state" to describe "functioning government" you are adopting the language of nutjobs and either are one or deserve to be called out as such.


"Deep state" is intended to sound sinister. Brietbart coined it and it's amazing how quickly it's entered our political lexicon.


> The deep state is just the permanent bureaucracy that sticks around as presidents come and go.

It's also far from a monolithic group of people with a similar point of view.


You could say the workers of such a permanent bureaucracy are at least united in the belief in the benefits of there being such a permanent bureaucracy; and more specifically, in the benefits of "non-partisan" bureaucracy, bureaucracy that isn't a catspaw of the party in power. (As opposed to a political spoils system, where each new administration comes with its own Civil Service.)

And, because of that implicit endorsement of non-partisanship as "how the job gets done", these bureaucrats tend to also be considered technocrats: people who evaluate policy mostly on how the ROI works out for "the people" or "the state", rather than in how it figures into any particular political narrative, or into their own "courtly favour" with the administration.

The label of "technocrat" then tends to put the workers of this bureaucracy into natural opposition—political-rhetoric-wise—with populist politicians, who as a rule evaluate policy by how it "plays" with the man-on-the-street (who has no knowledge of statecraft), and who tend to ignore what a policy will (or won't) actually be likely to accomplish. This opposition carries whether any given bureaucrat has any actual underlying opposition to the current populist sentiment or not.

So there's at least one other thing these bureaucrats will tend to agree on: to the degree that there is, in a political "era", a populist fervour in the country, bureaucrats will be unilaterally hated by the man on the street, due to the rhetorical manipulations of populist politicians.


If bureaucrats/technocrats "guard" us against "populists", who guards them?

Most bureaucrats and technocrats are just like any other human beings: often partisan, selfish and not decisively more able to distinguish a "good" decision from a bad one.

At best statecraft is the ultimate field for The Iron Law of Bureaucracy https://www.jerrypournelle.com/reports/jerryp/iron.html


Would you talk about soldiers, police officers, teachers, and firefighters the same way?

The word "bureaucrat" is just a catchall term for the people who work for the government and can't possibly be important or decent people because they don't occupy any mental space in your head.


> The word "bureaucrat" is just a catchall term for the people who work for the government

"People who work for the government" are "civil servants" (or "public servants")

A bureaucrat is a member of an "administrative system governing a large institution".

Each civil servant has some power when it comes to do what/how he wants to. On this behalf bureaucrats and (even more) technocrats are among the most powerful.

> soldiers

A soldier must obey (nearly) blindly, becoming a mere instrument for brass. Brass bureaucrats/technocrats have their own political agenda, and many adjust their actions accordingly.

> police officers

Most aren't bureaucrats. Theoretically they enforce laws, even if they don't agree with them. In practice many adjust their actions according to their own political agenda.

> teachers

Most aren't bureaucrats. Many teach according to their own political agenda, or just guard while repeating state propaganda.

> firefighters

Most aren't bureaucrats/technocrats. Moreover their field is not politically-loaded (nearly everyone agrees about what they have to do, and how).


If that term just refers to veteran government workers, why do you refer to them as the deep state instead of the competent state, or government veterans? It would be a lot more understandable and not sound like a conspiracy theory with that wording.


> If that term just refers to veteran government workers

Because it clearly doesn't just refer to common government workers that exist across multiple administrations.

It's the massively powerful leadership groups, political cliques, that influence agencies from the DOJ to Homeland to the FBI to NSA to CIA to the Pentagon and each military branch, and so on. They hand off ideological batons and pursue agendas across decades.

One example is the Cheney, Rumsfeld, Wolfowitz crew that wielded power across decades (approximately ~40 years), numerous presidencies, and various roles in and out of government. They're the Deep State personified. The Bush family was an integral part of enabling that clique although they float above it rather than swimming down in the muck where the political schemes are fleshed out (like deciding to invade Iraq and topple Saddam at some point in the future, back in 1991, as Wolfowitz & Co. did). They're able to pursue political agendas in and out of roles, through influence and connections in the government and private sector. Cheney, Rumsfeld and Wolfowitz were able to wait out the Clinton Presidency (which was only interested in no-fly zones and sanctions in Iraq) and then finally pursue their Iraq invasion with the friendly George W Bush admin. That's the sort of big ideological pursuit and time carry that only powerful pieces of the Deep State can successfully pull off.


or even civil servants


This is the appropriate term.

The problem with using it is it has a default positive sound to it. “Civil servants” are probably working to do good, no matter the political winds.

While those in the “deep state,” these folks are agenda driven and not trying to benefit the average American.

Thus, it is hard to vilify civil servants.


> “Civil servants” are probably working to do good, no matter the political winds.

"Working to do good" is an interesting phrase because it begs the question: Who's good?

Is it the citizen's good? There's not a reasonable way to approach or decide that short of elections (the ultimate form of polling), therefore whoever the citizens have elected should determine the "good."

Or alternatively, it could be their individual good and therefore irrelevant to the citizens and their wishes. In that case, riches, stability, or whatever all fit the bill but are probably counter to the "common good."

Or alternatively, it could be their agency's good and - once again - irrelevant to the citizens and their wishes. As long as the agency goes on an grows, that fits their "good" but may be counter to the "common good."

And unfortunately just declaring "we all know what good is!" doesn't apply when we take just the topics of education, healthcare policy, and the military.

Or to put it another way.. who do "civil servants" serve? If it's not the citizens, then we have a problem.


Have you ever watched the show Yes, Minister?


Most people call the "deep state" government employees (or civil servants). I honestly think that people outside the Washington D.C. area don't truly understand how much the rely on the federal government...


> However, some conspiracy theories turn out to be true, so we can't discount all of them without a merits-based examination of each hypothesis.)

No. Extraordinary claims require extraordinary evidence.

Unless evidence moves the Bayesian priors, conspiracy theories should be regarded as the garbage they are.

I don't subscribe to the post-truth society.


> Extraordinary claims require extraordinary evidence.

Such as this person clearly needing "mental help" because they implied collusion/corruption. Nobody asked or expected anyone to believe anything based on their statement, rather we are asked to believe it must be insane to make such a statement.


What's extraordinary about conspiracies?


> What's extraordinary about conspiracies?

1) Humans suck at keeping their mouths shut

2) Most conspiracy theories posit excessive competence (itself extremely rare) that somehow defies all the weird things that reality can throw at you and make things fail.

Most "conspiracies" had plenty of evidence even at the time--people chose to ignore it because it benefited them. See: Epstein, Weinstein, Cosby, etc.

So, real conspiracies that people don't know about do exist--but they are tremendously rare.


What is ordinary about them is a better question. The burden of proof is absolutely in your ballpark here.

Can you prove these aren't just crackpot theories? Do you have any primary sources or tangible evidence to support your claims?


I argued they're so ordinary and pervasive that considering that angle should be more common:

https://www.schneier.com/blog/archives/2013/06/the_psycholog...


Other way around. You're the one who said they were "extraordinary."


In the absence of evidence of the extraordinary, it seems most prudent to fall back to the ordinary in the vein of Occam’s razor. If you see a bright flash and then a tree catches fire, do you assume it’s lightning or a deep state conspiracy?


As I’ve said to others, yes I understand the “well technically” explanation of deep state but I’d posit that you’re still not particularly mentally fit if you’re declaring war on such a poorly conceived adversary.

How do you go to war with a deep state? What do you do? It sounds like pure delusion


Something that people who believe they are sane don't generally understand is that manifest psychosis/mania/paranoia cannot be refuted by proof (assuming it exists) that what you are talking about is accurate in some sense.

It's like if you are drunk, and you successfully drive your car through an obstacle course. You're still drunk!


I disagree. In the U.S., "deep state" is a deliberate reframing of the permanent bureaucracy to suggest that there's a faction of civil servants that make up a clandestine network working behind the scenes to manipulate or subvert democracy for their own ends without any accountability.

It's not a new idea, but the use in the U.S. is pretty new, and has seen seen a resurgence in popularity since Trump — a populist whose campaign was partly based on the premise of a deep state — was elected, partly in thanks to books like "Killing the Deep state" [1].

There have existed, and there still exist, "true" deep state systems, such as the intelligence services and FSB (and related obligarch axis) in Russia, that we should be wary of. Co-opting the phrase to refer to any permanent bureaucratic structure as a deep state is needlessly reductive (and historically incorrect), and also normalizes something we should consider a dangerous aberration.

It is a conspiracy theory, but it's taken very seriously by the people who use it.

I recommend this [2] video for some historians' perspective.

[1] https://www.amazon.com/Killing-Deep-State-Fight-President/dp...

[2] https://www.c-span.org/video/?461976-2/deep-state-american-h...


I'm not really sure why you're being downvoted. This guy is a quack. You can just skim the quotes and I'm not sure how exactly you end up with a different viewpoint.

Here he is threatening to "vaporize" the SEC if they clean up the fraudulent mess he created:

> Now, after 15 years of being scofflaws, the shorts are crying because they are getting sucked into a black hole they created themselves. If you call “Bazoomba!” for them now, I am going to use this website to vaporize you with information I give the public. I am 100% confident that at least one of you knows to what I am referring.


It only sounds crazy if you don't believe the "deep state" exists. It does, it's just not exactly what Trump claims it is.


> It does

Every definition of the "deep state" that I've heard is usually based on a vague conspiracy theory or is an obvious truth that draws conclusions about the intentions of state actors without providing any evidence. Can you prove me wrong?


Can I prove that "every definition [you've] heard is not usually based on a vague conspiracy theory or is not an obvious truth that draws conclusions about the intentions of state actors without providing any evidence." No.


Ok. What is the deep state to you?


I would define it as something like this:

The deep state is a set of individuals who use the powers granted to them by the government in order to further their own power interests and/or the power interests of extra-governmental entities regardless of whether the government and its constituents share in or benefit from those interests.


Couldn't you argue that this could fit plenty of elected politicians? This doesn't seem to capture any part of what people seem to mean by the term "deep"


The distinction between an elected politician and a "deep state" figure in this regard would be their identity.

You can probably name your Senators, maybe your House Member, and probably your local Mayor. You may have even voted for/against them.

What about the Deputy Undersecretary of Whatever who is in charge of that topic near and dear to your heart? You didn't elect them. You can't even name them. In fact, you probably don't even know that job and person exist.

I was in the Department of Justice and worked for a Deputy Assistant Attorney General in an agency you've never heard of just down the street from DOJ HQ. There were many lifers (worked there pushing 20 years) who I saw and heard say "Eh, I don't like the AG so I don't follow that policy."

Fundamentally, it's no different than the CEO of a major company saying "we're going to do X" and various middle managers saying "Nah, that's a bad idea. I'm going to ignore it."


Yeah, I don't know anyone who uses the term "deep state" unironically that doesn't also have strong opinions about what that actually means.


Sure. If you think that's an argument against the definition, then perhaps you could elaborate. Also, what do you think people seem to mean by the term "deep" that isn't captured?


People who believe in the "deep state" but aren't cranks or self-serving propagandists call it what it is: "the bureaucracy" or "the civil service".

And, oddly, it turns out to be one of the best inventions of modern government as it keeps things running in an orderly fashion in the face of leadership changes.


Right, I get that “technically” there is a deep state it’s not some strange esoteric knowledge.

That really doesn’t make it any more sane to plan a war against a poorly defined adversary, this is a hall mark of delusion. I don’t see why my comment warranted downvotes


> I don’t see why my comment warranted downvotes

It doesn't, really. I think this audience probably has a high representation of people who regard the "deep state" as a real entity that we should fight against and take issue on a personal level with your well-founded claim that the guy is a bit cuckoo


His story is so strange yet look at his success is he really crazy, all that is staged or its real?

Overall peculiar and fascinating.


I vouched for this because while the post sounds nuts, it's clearly quoted from the article and Byrne himself.


If Edward Snowden couldn't convince you of the existence of a deep state serving their own interests as opposed to the public's, I doubt anyone can.


Reminds me of John McAfee.


Is everyone who believes that there are nefarious forces at work crazy?


New York Post:

"Under the dividend plan revealed July 30, a crypto-payment will be awarded to Overstock shareholders of record as of Sept. 23 on tZero, a blockchain-based trading platform operated by an affiliate of Overstock. The dividends, accessible only through a Dinosaur Financial Group brokerage account, aren’t payable until Nov. 15 and cannot be traded for six months afterward — or May 15, at the earliest."

Dinosaur Financial Group:

"Dinosaur Financial Group is a company of global capital markets experts who operate on the assumption that what you want to do can be done."

You can also read the tZero site, but it reads like every other weirdo ICO token company.


wow this was hilarious, great writer




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