Bizarre is a word I’ve heard muttered often over the past few days when it comes to Overstock.com.
Last Thursday, the online closeout retailer announced the filing of an unfair business practices lawsuit against research firm Gradient Analytics and hedge fund Rocker Partners. A number of individuals involved in both outfits were also named in the suit, and the suit may be expanded to include other individuals and companies. The lawsuit alleges that the defendants have conspired to denigrate Overstock.com’s business for personal profit.
The morning after the lawsuit was announced, Overstock.com President Patrick Byrne conducted a conference call to address the lawsuit. The call turned into a tangent-riddled rant against the hedge fund industry, stock short-sellers, the Securities and Exchange Commission, and the media.
“And here’s the funny part. As this went on I started realizing that there was actually some more orchestration here being provided, by what I’m calling here is the Sith Lord or the mastermind. Now, can I tell you who that designated bottom feeder was who was supposed to end up with our company? Can I tell you? I can. But I’m not going to today. The Sith Lord is; can I tell you who that is? Well, I could tell you it’s a name that everybody on the phone, every single person on the phone, would recognize this person’s name. He’s one of the master criminals from the 1980s, and he’s back in business. But I’m not going to. I’ll just call him the master mind today,” Byrne stated, using the villain from the recent “Star War” movies to characterize the person who he claims is behind attempts to undermine the performance of Overstock.com’s stock.
On Friday afternoon, Byrne appeared live on CNBC for a lengthy interview conducted by Ron Insana. Byrne’s interview was one of the longest I can recall seeing aired on the network, which usually limits even the best-known corporate executives to five or six minutes of air time. Byrne’s interview, by contrast, lasted almost fifteen minutes, during which time he again attacked those he feels are responsible for conspiring against Overstock.com.
For the sake of clarity and space, I won’t get into the story behind the lawsuit. The issues involved are extremely complicated, even to many investment professionals. The lawsuit itself provides ample detail and is written coherently as to provide adequate background on the matter. Moreso, I won’t attempt to dissect the validity of the lawsuit, as only one party involved has told even a fraction of their side of the story.
What I will discuss is the public relations implications of the lawsuit and Byrne’s behavior. Before I do that, however, I need to provide a disclaimer.
I’ve written about Overstock.com before in this newsletter. I called the company “XYZ Corp.” in a newsletter I wrote last year about “antagonizing the media at your own risk.” In that newsletter, I mentioned I was one of Overstock.com’s “antagonized” targets at one point. In fact, after I wrote a negative story about Overstock.com for The New York Post last year, Byrne went on the record and told a reporter at Bloomberg News that I had orchestrated the story with “shorts” (i.e., investors who bet the stock will lose value) on Overstock.com. For whatever reason, Bloomberg News never ran the quote, and I never wrote about the company again for The New York Post. (There was no particular reason for this; I just never did).
Nonetheless, Byrne’s behavior at the time caused me to take notice of how his company conducts PR. Why would the CEO of a public company attack me by making baseless statements to another journalist? Why would a company, two months after last I wrote about them, issue a press release suggesting that I was in cahoots with the shorts? To say that I’ve been fascinated with Overstock.com’s PR strategy would be an understatement.
Now, with all of that said, we’re ready to attack the issue at hand: Did Byrne do Overstock.com a disservice with his conference call and CNBC appearance?
Shares of Overstock.com rose more than 7% on Friday, and the stock hit intraday levels not seen since mid-March. In fact, the stock gained most of its ground during and after Byrne’s appearance on CNBC. Moreso, Overstock.com became the big story of the day not just on CNBC, but inside Wall Street circles, where the slow summer Friday appearance of “juicy” news was greeted feverishly. The stock, however, fell on Monday, and again on Tuesday. Considering the historic volatility of Overstock.com’s stock, none of this is surprising. PR, however, is not a short-term gain or short-term loss, so we must examine the wider implications of Byrne’s behavior.
Because Byrne directly attacked the media, including outlets such as The Wall Street Journal, journalists seem to be handling the story with some kid gloves at the moment. Coverage of the news has certainly been slower than I expected, and I spoke to a few of journalists who have covered the company and the developing story. The prevailing attitude appears to be one of caution, because as one scribe said, “This is just too strange right now to really dig into.”
Of course, caution can be thrown to the wind sometimes, as evidenced by my old home, The New York Post.
“A spokesman for Overstock said that Byrne was committed to standing up for the company and ‘righting wrongs where he sees them.’ The presentation, the spokesman said, was not part of the long-range public relations strategy of the company. He said that Byrne, to his knowledge, is not currently under any psychiatric care and that he was sober when he gave the presentation,” Roddy Boyd wrote in Sunday’s New York Post, saying that Byrne had put on “arguably the strangest performance by a corporate executive in recent memory.”
Boyd’s article, not surprisingly, is being attacked by Overstock.com supporters, and I don’t blame them. Then again, they should have expected this type of response. I certainly agree that Byrne’s performance was “arguably the strangest performance by a corporate executive in recent memory,” and part of my job is to monitor what corporate executives are doing and saying.
It is somewhat difficult to fault Byrne for being both defensive and aggressive. He feels his company is not just being attacked but is being conspired against. Moreso, as the company’s largest shareholder, Byrne has a huge economic interest to protect. Likewise, he has the jobs of his employees, and the value of his shareholders’ investments, to worry about. Regardless, his handling of the current situation is troubling.
For example, Byrne’s public comments – both on the conference call and on television – could harm his company’s lawsuit. This is a prime example of why most companies offer little or no comment to the media when there is litigation pending. The lawsuit should speak for itself, and if you need to explain the lawsuit to the public, you either have bad lawyers or a bad case.
Worse, Byrne did little to clarify the specifics of the lawsuit on the conference call (the purpose of the call), and ended up turning the event into a long, confusing rant. How this helps his company’s case in the court of law or court of public opinion is beyond me. Again, instead of letting the actual lawsuit speak for itself, Byrne – not the important issues at hand – became the story.
Byrne’s CNBC appearance was not much better than his conference call performance. He seemed standoffish at points; he also didn’t have the body language, facial expressions or general appearance you expect from a CEO. We expect CEOs to exhibit confidence and a certain stoicism, not to have the look of someone who stayed up all night.
Overstock.com’s lawyers haven’t been much help in the PR arena either. The lead firm handling the case issued a rather corny press release trumpeting their involvement, a rather strange move in my book. Again, let the suit speak for itself.
“We have an expression in Texas about the skill of matching the mules. Combining our lawyers and a-level experts with the tenacity, verve and commitment of Overstock.com CEO Dr. Patrick Byrne is a powerful alliance, hitched up for the long haul to win this battle. It is time someone tops these offshore hedge funds from taking advantage of average working Americans and American Public companies. That someone is us,” Attorney John O’Quinn stated in the release.
Another of Overstock.com’s lawyers told the New York Post that “he understood how many reporters and investors could be confused or dismayed by [Byrne’s] presentation. He said [Byrne’s] later appearance on CNBC made his case better.”
That’s not exactly a sign of confidence.
Make no mistake, Overstock.com’s lawsuit is important, and the case will be watched closely in many arenas. The problem is that, at least for now, the merits of the lawsuit have been ignored because of Byrne’s behavior. This does not benefit Overstock.com or its shareholders, and it has caused the media to ignore the larger story.
More importantly, Byrne’s constant attacks on the media over the past few years have done nothing but create bad will. Byrne obviously doesn’t believe the media treats his company fairly, and he has made this abundantly clear. However, by doling out personal attacks on journalists, Byrne has also essentially thrown away any chances of finding a sympathetic ear in the media, and he will need the media to help educate the public about this lawsuit and the issues at-hand (because, as it stands, Byrne can’t seem to find an intelligent way to do this on his own).
From a PR standpoint, Overstock.com’s lawsuit has been a disaster thus far. The company has been unable to present its case to the public in a clear manner; the public face of the company has people wondering about his mental state; and the company’s lawyers appear more interested in hyping their involvement than doing their jobs. Overstock.com shareholders, no doubt, hope the company’s legal strategy is better than its PR strategy, while the media awaits the next bizarre action from Byrne.
In the end, this case will be played out in the real courts, not the court of public opinion. However, if you’re going to use public venues to make your case, as Overstock.com has tried to do, it helps to portray yourself professionally. As it stands, Overstock.com has portrayed itself as paranoid and rambling. This may work well at UFO conventions, but it’s not going to help you on Main Street or Wall Street.
This article, written by Ben Silverman, originally appeared in PR Fuel (https://www.ereleases.com/prfuel), a free weekly newsletter from eReleases (https://www.ereleases.com), the online leader in affordable press release distribution. To subscribe to PR Fuel, visit: https://www.ereleases.com/prfuel/subscribe/.