Thirty Minute Mentors Podcast Transcript: Overstock CEO Jonathan Johnson

I recently interviewed Jonathan Johnson on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:

Adam: Our guest today is the leader of one of America's most notable online marketplaces. Jonathan Johnson is the CEO of Overstock, where he oversees a business that generated more than $2.7 billion last year. Jonathan, thank you for joining us,

Jonathan: Adam, it's a pleasure. Thank you for having me.

Adam: Pleasure is mine. You are from Los Angeles, my hometown. But you've spent the majority of your life in Utah, home of overstock and home of BYU where you did your undergrad in, where you went to law school. Can you take listeners back to your early days? What were the key experiences that shaped your worldview and shaped the trajectory of your success?

Jonathan: Well, I'll tell you, one thing that happened to me as maybe an 11 or 12-year-old, living in Los Angeles. I was at the grocery store, with my mother, and my six younger brothers, and we were a big brood, particularly in West Los Angeles, this was the mid-70s. And someone in the grocery store was scolding my mother for having these six little boys that were rambunctious in the store, giving her what for our behavior. And my mother looked through this bone politely and said, “These boys are going to have a huge impact on society. I'm doing my best to mother them”. And it makes a difference. And I don't think my mother knew that I took note of that. But I did as an 11 or 12-year-old. And it set me in a place where I knew I needed to be a contributing member of society. And I wanted to make my mark. It was one of those things that never went spoken to my mother and she's long since passed away. And I wish I could tell her that that made a difference on a day when I think she was probably frazzled and frustrated but did something for me.

Adam: I love that. Little moments can go a long way, the power of standing up for the people around you. In your mom's case, it was her children. But for anyone listening, don't be afraid to stand up for what you believe in, who you believe in.

Jonathan: Yeah, no, I really think that's right. And I've tried to live that way. And there's been people in the organization that in Overstock, or other places I've been, that I think have been misjudged, and kind of gotten a bad rap. I worked a lot. My colleagues know and their colleagues know that that person is more capable than maybe they're being judged in a conversation that I'm part of. And so when you think someone's worth standing up for, do it.

Adam: Really important takeaway. You spent the first 12 years of your career working as a lawyer, two different clerkships. Then two different law firms, followed by two different jobs as general counsel, including your last job as a lawyer, which was also your first job at Overstock. While at Overstock, you went from general counsel to senior vice president to president to acting CEO, then to executive vice chairman to chairman of the board, then to interim CEO and CEO. Quite a rise. What were the keys to rising within your career? And what can anyone listening to this conversation do to rise within their career?

Jonathan: Wow, that's a really deep question, Adam. And I'll go back early in my career, I was a young associate lawyer. And I was working on the first deal where the partner I was working for and the client I was working for, trusted me to be the main lawyer on the event. And I was working for a large Japanese toy maker, Bondi and their number one property at the time and this was the mid 90s, was the Power Rangers which was a big popular toy. And I was negotiating a deal with a T-shirt and underwear maker for kids T-shirts and underwear. They wanted to license the Power Rangers and sell that kind of underwear. I talked to the client, and I said, “What are the things that are important to you? And I'll make sure we get those in the negotiation”. I had this list of eight or 10 things and went through the negotiation by myself and negotiated the deal. We won on all eight or 10 of those points that came back, I was very eager to report this to the client on how well we talked to the client. And they said, “Well, gee, this is not a very good deal”. And I said, “I got everything we wanted, how can it not be a good deal?”. And the client said, “This is a good deal for us. And we'll make a lot of money on this in a year. But the other side will lose money in any year, we'll be looking for a new partner licensed to put the Power Rangers on underwear, go back and negotiate a more fair deal”. So being a little scolded by a client, I put my tail between my legs and called the lawyer on the other side and said, “Hey, I'm sorry, I talked to my client, we don't have a deal”. And he said, “Well, there's nothing more we can give”. And I said, “You're going to do the getting”. And we negotiated a deal that lasted for years. And that really impacted the way I tried to be as a lawyer. And today I try to be a business leader. We have to work on the theory of win-win deals, whether it's with a supplier, whether it's with our shareholders, our employees, it has to be our customers. It's not just Overstock that needs to make money. But the employees need to have a fair deal. Customers need to get a deal or suppliers need to be able to make money in the deal. And there is plenty of room in business for win-win deals. It's not a zero-sum game. And I learned that early as a lawyer and it's made a difference in rising up.

Adam: Such an important lesson, such important advice, the power of seeing things from both sides perspectives. And in the case of a negotiation, it could be two sides. In the case of running a business, it's more than two sides. It's looking at it from the perspective of every stakeholder, as you mentioned, your customers, your employees, your investors, everyone who has skin in the game, and everyone who can have skin in the game, the power of having a long view, understanding that you could win the battle but lose the war. And in the case of this negotiation, you could be a winner today and a loser tomorrow.

Jonathan: Yeah, I really think a win-win deal is much better and longer lasting than a win-lose deal. So I always try to be fair, but not be taken advantage of. Another thing I would say that's been helpful in my career was advice I got early on from my father. He said, “Johnny, you'll do better when you make your boss's life easier”. And so I've always taken that to heart and tried to get projects done quickly. But also, when I've seen things that needed to be done that weren't assigned to me, I volunteer for him. It helped me expand my scope of responsibility and helped me expand my vision of the company, and gave me more things to work on. Another thing I've tried to do to make my boss's life easier in my career is when I see something that needs to be fixed. I don't just say, hey, here's a problem. What should we do to fix it? I would say here's a problem. Here's what I think we should do. And here's what I intend to do to get it done. And I've found where people come to me with that attitude of, here's a problem I see. And here's what I intend to do to fix it. It makes the problem so manageable because it doesn't become my problem. It's something that be that gets done by both of us with someone else recognizing and doing

Adam: The importance of being proactive and taking charge. Not taking charge because you want to assert yourself for the sake of asserting yourself but taking charge because you believe that you can make a difference and doing it in a collaborative way. What are the other things that you look for as you're hiring people as you're building teams? And what advice do you have for our listeners on the topic of hiring?

Jonathan: So hiring is frankly one of the most important things that I do as a CEO and what I'm involved in. What am I looking for from an employer? I'm looking for someone, one who is capable and can do the job they're being hired for and learn to do the next job that they could do. So I'm looking for smarts and capability. I'm looking for somebody who's a hard worker who's accountable and reliable. Someone who's willing to problem solve and who's in problem-solving is willing to admit mistakes. One of the questions I ask frequently when I interview people is, tell me a time you worked on something that didn't go well, or that went wrong. And then what happened, because all of us make mistakes, I made plenty of mistakes. And what I want to see is what they've learned from that, and how they solve those problems. And I really want someone who's outcome driven. Not, hey, I got a task done, I don't really want to give people tasks. I want to give them goals to work for, they can figure out how best to get there. And so outcome driven is a really important characteristic or a quality that I look for in people that I hire and work with.

Adam: You mentioned the importance of learning from mistakes. What do you consider to be the most critical mistake that you've made in your career? And what did you learn from it?

Jonathan: What's the most critical mistake I've made? I've made a lot of mistakes. I think, early on, when I became a manager of people, my critical mistake was not letting go of doing things. The first general counsel I hired that reported to me, I've been a lawyer for so long. I felt like I could do the job better than they could. And because I was micromanaging them, I wasn't letting them grow. Think micromanaging has been a critical mistake I've made and tried to fix because one, it may have meant I was doing two jobs, my new job and the job of the person I was managing. And I wasn't letting the person who was managing grow, and getting better at doing the job than I ever was. And I always try to hire people that can do a job better than I can do and ultimately be the person to replace me and my job.

Adam: And over the course of your career, as we spoke a little bit about, you've managed to reinvent yourself many times, and you've played a key role in helping Overstock reinvent itself. In the two decades you've been in leadership roles at the company, the Overstock business model has gone through many different iterations. How can anyone successfully pivot whether they're pivoting in their careers or pivoting their businesses in their capacity as a leader?

Jonathan: Now you’ve mentioned Overstocks' ever-changing and more focused business model. We went from being a liquidator when I first joined the company 20 some odd years ago, to being a general merchandiser online. Being involved in incubating blockchain businesses, to now being focused on being an online retailer that provides dream homes for all we're focused on home furniture and home furnishings. And so we've become more focused. I think the key to pivoting professionally is to be a constant learner. When I was in law school, e-commerce wasn't even a thing, it didn't exist. So I couldn't have said, hey, at some point, I want to be the general counsel as CEO of an e-commerce company because no one would have known what that meant. When I was the president of Overstock, blockchain technology wasn't yet a thing. So I couldn't have said, hey, I'd like to be the president of Overstocks division of investing in blockchain businesses because that wasn't a thing. But by always trying to be a constant learner. When those things arose, e-commerce blockchain, they were things that I was studying and learning about so I could jump into and keep learning and growing. So I think if you want to morph your career, you have to commit to being a constant learner. If you want to morph your business, you have to look and see what our customers want. And at Overstock, it became very clear that our customers who came and shopped for home furnishings and furniture shopped more frequently and spent more money. And bought more often, visited our site and bought more and more, more money and more often. And so we decided that was who our customer was. And it was an easy way to pivot to keep our customers happy.

Adam: You bring up two great points and they tie in directly to the topic of leadership. The importance of continual lifelong learning, integral to successful leadership. The importance of seeing things through the perspective of others, integral to great leadership. What do you believe are the key characteristics of a great leader? And what can anyone do to become a better leader?

Jonathan: Well, I'm a big believer in the theory of intent-based leadership. And I think the best leaders empower their team and coach their team. As I've said, if we hire good people, and we have clear goals, I don't need to micromanage them, they can figure out how to achieve those goals. So I think empowering and coaching are important. I think being communicative and inspirational are important. That's been particularly important during the period that I've been the CEO of Overstock, where we've gone through a pandemic, and we've gone from all being together to being remote in the need to communicate more frequently, more honestly, more vulnerably, and in a more human way. So I think good leaders are communicative and inspirational. They're empowering and in coaching. And when the time is right, they're very decisive. Teams look for their leaders when the team can make a decision, or the leader to make a decision.

Adam: What was the toughest decision you've had to make as a leader? And what's your framework around making difficult decisions?

Jonathan: One of the tough decisions we've grappled with a post-pandemic is, what does the future of work look like? We knew at Overstock, we were very productive when we were all in the office working together. We also knew that we were very productive and successful when we were all at home, working during the pandemic. But what did the post-pandemic look like? And given my proclivity to be a workaholic and to spend time in the office, I thought the answer was, we've got to get back to the office sooner than later. But as I socialized that among our other chief executives, and wanted to better understand what their workforces needed, it became clear to me that many of my colleagues at Overstock, worked better from home, and coming back to the office would probably slow our productivity. So over time, we came up with something that we referred to at Overstock is the forward plan, which is an acronym for future of remote work and reentry design, where we ask different people in different positions to come into the office at different frequencies. And some we have hardly come in at all. But when they're in the office, it has to be for a specific purpose, not for doing what they can do well at home, not for answering email, being in zoom meetings, prefer collaboration, or for connection in ways we can't connect online. And so this has been one of the big challenges that we've been facing is what work looks like in the new economy. And we've determined that for us, it's largely remote work, coming together infrequently. But when we come together, always with a specific purpose, that can't be achieved remotely.

Adam: And the future of work is a huge topic. It's a topic that we'll be working itself out over the course of the next several years. Something that you mentioned right off the bat, which I thought was really interesting and important for listeners to learn from. You had your perspective, you had your view, which was a strong view. But rather than imposing your will, on your team on your company, to your business, you're the CEO, you instead ask for the input of those around you a consultative style of leadership, the power of asking questions, and the power of listening, you took the time to go out and ask. And just as importantly, if not, more importantly, you listened. And instead of acting on your initial instinct, ultimately acted on what the consensus view was, which impacted your initial thinking and ultimately impacted the decision.

Jonathan: At Overstock, we have a set of five leadership principles that we ask all of our leaders to follow up. And one of them is actively listening to understand. And we want to give our undivided attention and consider others perspectives. And I think, too many people spend the time they shouldn't be listening, thinking of how they're going to respond, or how they're going to counter what's being said. And I think good leaders spend more time digesting, studying and talking. And so I'm a big believer in being an active listener, and the focus of the listening should be to understand other people's viewpoints.

Adam: Well, Jonathan, I cannot agree with you more. A leader who you worked with hand in hand for 17 years, Patrick Byrne, the visionary founder and former CEO of Overstock, was no stranger to controversy. And it was in the middle of a significant controversy that Patrick stepped down and you took over as CEO of Overstock, a highly tumultuous time for the company. You are now the interim CEO, not long after you become the full-time CEO. This was one of many periods since you've become the CEO of Overstock, that have been highly volatile, highly tumultuous. External factors. We've had a pandemic, we've had market volatility, we've had too many things to list. This is only a 30-minute podcast. What have been the biggest takeaways from your experiences leading during these moments? And what do you believe are the keys to leading effectively during times of tumult, uncertainty, and volatility?

Jonathan: First, I think you need to understand the mood. The mood of you, the mood of the room, the mood of your employees, and what they're worried about. I go back to when I first became CEO, and I sat in the first Overstock executive meeting that I'd sat in for six years. I'd been away from the day-to-day on the board, and then I've been running our blockchain business, now coming back to our core e-commerce business. And there were three things I noticed. One was the things that were being discussed were very familiar to me, they hadn't changed that much in six years. And so I was very comfortable, I could do the job. The second was people were nervous about what I thought of them, particularly because I hadn't worked with some for many years. And I tried to set them in straightaway by saying, I am looking at you through 2019 eyes, that was the year it was not 2013 eyes, I'm looking at who you are today, not who you were when I knew you last. And then the third thing I noticed was, there were so many people in the room, while we were discussing things and trying to make decisions, who would look to me and were ready for me to say, okay, this is how it's going to be done, make the decision and say this is how it's going to be done. And most of the time in my opinion, I'm a good decision maker. I knew what I wanted to do. But I also knew that we just had a founder. And founders tend to be more involved in decision-making because they're very involved in the beginning of the company and they kind of keep very involved. And I didn't want to be a micromanager. So rather than make decisions myself quickly, I spent time with team talking through them until they were comfortable making the decision and owning it themselves. Again, it's a key part of intent-based leadership, to try and get people to say, this is what I intend to do, make the decisions themselves. And so I think in times of tumult, you have to understand what people's concerns are, trying to address them, and then try and empower them so that they're not worried about what I'm going to be doing as a leader, but are more worried about what they can do to advance the business going forward?

Adam: Going back to the power of listening, and powering others, building buy-in, essential to leading in times good, in times bad, especially in times of bad.

Jonathan: Yeah. And then during the pandemic, where everyone was worried, are we going to have jobs? Just to be very candid, I remember standing up and standing in front of the company at our first company-wide stand-up after I was appointed the CEO and taking questions from my colleagues in the workforce. And one of the first questions is, are we gonna get a bonus at the end of the year? Well, the company was losing market share and losing money. And I knew that the answer that that employee wanted to hear was yes. But I knew the right answer was no, because we weren't in a position where we could do that. So I told the truth. And I said, not this year. But next year, when we put our budget together, we're going to set goals that are going to be realistic, and if we hit them will pay a bonus. Well, the next year was the year of the pandemic, and for Overstock, an e-commerce, home furnishing business, it was a bonanza of the year. And I made good on that promise in a way that no employee could have imagined, we paid the largest bonus in the company history by far. But being honest and telling the truth, even when it was a little bit of an uncomfortable or inconvenient truth upfront, I think I began establishing a relationship of trust between our employees and me because they knew I'd shoot straight with them.

Adam: One of the most important things a leader has to do is build trust. And you just gave a great playbook on how to do it. And going back to something we spoke about earlier on in the conversation, playing the long game, understanding that if you're trying to make decisions that are predicated on only what's happening today, you're gonna do so at your own peril.

Jonathan: We know what we're going through right now, we always try to build value. And I think too many public companies and public company leaders think about what am I doing to meet the quarter, there's this pressure to meet the quarter. And I think it's much better to build value as much as possible. I try to make decisions on what's best for the business in the long term, not the next quarter. And I'll give you an example of this. We have, as I mentioned earlier, we're a general retailer, we sold all kinds of things. 80% of our revenue came from the home business, but 20% came from other things. And six quarters ago, we decided, you know what? Our best customers, our most loyal customers, our home customers, they are who we need to focus on. And so over six quarters, we've slowly gotten out of the non-home business to where we don't sell any non-home products. And, of course, dribbling out of what was almost 20% of our revenue had some short-term pain. But we think and we've seen that the long-term gain of that is worth the short-term pain. So taking the long view to build value, rather than making the media do what's best for us today, or this quarter, I think is a really important perspective.

Adam: Another way I know that you've been very focused on building value at Overstock, has been on building your culture, something that wasn't a big focus at Overstock during your early days at the company but has been top of mind for you. Since becoming CEO, what can leaders do to build winning organizational cultures?

Jonathan: Well, first of all, I think you have to recognize you have a culture, no matter whether you're focused on culture, or not. Every organization has a culture. And Overstock had a culture and I became the CEO. It just wasn't purposeful and intentional. And so I sat down with our chief people officer, and we began saying, who are we today? What are the good parts of who we are that we want to emphasize? And who do we want to become as a company? And in that aspirational piece, how realistic is it? Because I wanted to be very intentional and come up with a culture that included a vision, a mission, values, leadership principles and qualities that we wanted to nurture and be very intentional about it. And I started working with our chief people care officer, and we set up who we were in the good pieces, who we were in the bad pieces, that we wanted to let go of, and who we wanted to become. We wrote that down, we presented it to our senior executive team, we discussed it, we wordsmith it, we took it to our broader executive team and did the same. And then we announced it to the company in a very meaningful rollout. Explaining what every term meant, and why it was important. So now it was a stated document, we had a booklet and it was a culture. But that was just the beginning. We knew we needed to nourish that culture, in order for that culture to flourish. So one of the things we do to nourish it is, at the beginning of every executive meeting, every department stand up, every company-wide stand up, we take time to see to highlight someone who is living an aspect. And when we call our Overstock culture, that person may or may not be in the room, usually they aren't. And we say, you know what? Here's an example of Adam, living our leadership principle of assuming good intent, and we explain exactly what Adam did and how he assumed good intent. And then we make sure that his manager, your manager in the room, knows to report that back to you. Every company-wide email I send, as an example of we are Overstock superhero, we try and catch people doing good, catch them living our culture, rather than we usually word use that verb to catch people doing bad or making mistakes. I think we have to give more attaboys and attagirls than overshoots. Because it takes a lot more out of boys and our girls to build people up than it does to tear him down. 

Adam: Catch people doing good. I love that. What can anyone listening to this conversation do to become more successful personally and professionally?

Jonathan: Well, I think first, and I've mentioned this a little bit more, I think you got to commit to be a lifelong learner. You've got to find ways to be a problem solver. And then you have to find something that you like to do. I have five children, five sons, and I frequently tell them, find a job where you enjoy it. You can always find a job that will pay you more. In fact, I'm confident every person listening to this podcast could find a job that will pay them more. Will they find a job that gives them more satisfaction? If the answer to that is yes, they probably should look at it. But if the answer is they're satisfied, and they're fulfilled where they're doing, they're going to have a successful career. The last thing I would say is you need to manage your own career. Nobody cares about your career as much as you do. You need to find mentors to help you in that career. You need to, in your annual or semi-annual reviews, talk to your manager about what your goals are and how your manager can help you achieve it. Be very proactive in what you want to become. And having others help you along the way.

Adam: Jonathan, thank you for all the great advice and thank you for being a part of Thirty Minute Mentors.

Jonathan: Oh, Adam, thank you for having me. It's been a pleasure to chat with you.


Adam Mendler is the CEO of The Veloz Group, where he co-founded and oversees ventures across a wide variety of industries. Adam is also the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one on one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal winning athletes, political and military leaders - for intimate half-hour conversations each week. Adam has written extensively on leadership, management, entrepreneurship, marketing and sales, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one on one interviews with America’s top leaders through his collective media projects. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities and non-profit organizations.

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