Sales From the Crypt
You've probably heard the old saying: When life hands you lemons, make lemonade. That's what Overstock.com CEO Patrick Byrne is doing with his Salt Lake City Web site-except he's turning other people's lemons into very sweet lemonade, both for himself and customers.
To explain: The 38-year-old took over Overstock in 1999. Soon, the company began buying up the inventories of failing and floundering dotcoms and selling them at heavily discounted prices on the site. Inventories it's taken on have come from such big-name dotcoms as Miadora.com, eHats.com, ToyTime.com and Jewelry.com.
Dying dotcoms need money in their hands fast, and Byrne (who brought upward of $25 million to the company) has got the greenbacks.
The strategy seems to be working: Byrne claims Overstock is the first "pure-play" (meaning it has no brick-and-mortar partner) e-tailer to become profitable. "We reached this milestone by focusing on building values rather than hype," he says. "We have established the fundamentals of a long-term and sustainable business. We're proud to say that we used up only $27 million in capital before we became profitable, while other top e-tailers have burned through hundreds of millions and even billions of dollars in capital and have not yet figured out a way to make a profit."
And although so many other dotcoms are still sputtering into oblivion, Byrne insists continued growth and bright days are ahead for Overstock.
Robert McGarvey is the author of How to Dotcom (Entrepreneur Press).