Correction: This story has been updated to correct Amazon's profit history in the second paragraph.
NEW YORK (TheStreet) -- Overstock (OSTK) - Get Report is most famously known for selling inexpensive furniture, but the company has ventured into a wide variety of side projects under the helm of its eccentric CEO, Patrick Byrne.
Overstock frequently gets compared to Amazon (AMZN) - Get Report, and positioned in its shadows, but it has been chugging along profitably for more than a year, whereas Amazon reported losses in two out of the past three quarters. Overstock reported annual revenue of $1.5 billion in 2014, up 15% from 2013, as well as a gross profit of $279.1 million, up 13% from 2013.
Shares are trading around $24, up more than 50% from July, when the company reached its 52-week low of $13.82.
The online retailer has invested in bitcoin technology, community-supported agriculture, pet adoption, and digital content--all seemingly unrelated to Overstock's core business. However, Byrne is confident that all of his ventures are aligned under making Overstock a "way of life."
TheStreet spoke with Byrne to learn more about these side projects and and his goals for the company.
TheStreet: You recently announced that you would be adding digital content streaming for your Club O members. How is your loyalty program doing?
Patrick Byrne: Our Club O program is blossoming; it's a more generous version of what Amazon does, and it's growing very quickly. It's a different feel than Amazon Prime. You [subscribe] for $20, and you get rewards equal to 5%-25% of what you buy from then on. It's a rewards program rather than an expedited shipping program.
We want to use Club O as something that ties together a lot of different ventures we're getting into and to make it more rational for our consumers to pledge their loyalty to Overstock. They save us money when they join our loyalty program--it saves us a lot of marketing costs, so we can share some of that back with them because that's what pays for the benefits. It's a virtuous circle.
TheStreet: You've also recently gotten involved in community supported agriculture (CSA) -- how does that work?
Byrne: We built a platform last year for CSAs to integrate into, and you can order your local fresh food from local farms in season delivered to your door. We've been signing up various farms in America. Right now, 42% of the American population can order organic local delivery through us. We will be at 50% in a month.
TheStreet: Why was this something you wanted to invest in?
Byrne: The food Americans eat is killing them, and they don't know any better. The food the typical American eats is revolting; it's a processed, food-like substance. It's horrible for them, and they don't know any better. We can do what Uber has done to the taxi industry to the mass industrial corporate agriculture supply chain. It's been almost in stealth mode. We're having lots of sales, but we're not advertising it yet.
Patrick Byrne, CEO of Overstock
Byrne: CSAs have figured out how to do this. There might be 20 farms which get together and buy a warehouse, and it's outside a city. Then they start growing their stuff and bringing it into the warehouse, and in the warehouse there are people boxing it. You pay $35 a week, say, and once a week you get a box delivered to your door, and it's a box that's fresh, so you're eating local. Google and Amazon are focusing on the normal conventional grocery business; we don't really see anything to pursue there. We're focusing on this organic local end of the market.
TheStreet: Why did you decide to launch a free pet adoption platform?
Byrne: The pet adoption is just a public service. We're wired into all the pet shelters in America, and now you can search all the pet shelters in America through our pet adoption app and we love that. We crossed 34,000 pet adoptions.
TheStreet: Why have you decided to venture out to all of these seemingly disparate areas?
Byrne: We had 30 million unique visitors per month last year, and Christmas it rose to 40 million. We have this tremendous river of people who want to see what we can do, and the common denominator is we're cutting out the middleman. Amazon is about being the middleman, recreating the middleman in the form of an Amazon warehouse. We're about cutting out the middleman. We have a whole roadmap of where we're going with this, and ultimately we want to make it a way of life. Shopping or coming to Overstock can be a way of life, let us take care of getting cheap products.
TheStreet: You also accept bitcoin on Overstock.com, why are you so interested in cryptocurrency and block chains (the transactions database for bitcoins)?
Byrne: We're working on a technology that uses the block chain, the underlying technology of bitcoin. We think we can replace a lot of the functions of Wall Street with technology based on the block chain. I'm actually agnostic about whether bitcoin thrives as a currency or is it going to be other coins. I'm about the crypto revolution. The block chain lets us have peer to peer transactions, yet trustworthy relationships. Never has this existed before in human history.There are all kinds of social and political institutions that that disrupts, such as central banks, such as monetary systems, such as the Depository Trust and Clearing Corporation -- their business model is we're going to solve the problem of trust, but everyone's going to have to deal through us. But what happens when we don't need them anymore, we can disintermediate their business model?
TheStreet: How do you plan to use the block chain at Overstock?
Byrne: We're rebuilding some of what Wall Street does now using prime brokers. Some of the functions can be accomplished instead of with an office tower full of crooks figuring out how to run your trade and taking advantage of the lack of transparency in the market. You can shift some of those transactions into the block chain. How exactly we're doing that I think will become apparent in the quarter.
In the course of being a public CEO, I discovered how corrupt the system is and where it's being gamed and rigged, and I think the market is profoundly rigged by some corrupt central institutions who forgot we don't work for them, they work for us.
Instead of arguing with them, we're going to have an alternative that works even better, and let them figure out what its like to be disintermediated.