GameStop CEO Ryan Cohen 以560亿美元接管eBay的计划

Everyone hates GameStop, and it seems like everyone in the media basically wants us to fail and wants them to succeed. You've got a board that's making hundreds of thousands of dollars a year. They don't buy stock with their own money. They show up to a handful of board meetings, and they're making a fortune.

You've got a management team that's grossly overpaid. There's nothing more American than risking your own capital. So why does everyone want us to fail?

Ryan Cohen, welcome to the All-In interview. Thanks for being here.

Thank you for having me.

I think it's been about a decade, which is crazy—how old we get—since you and I last had dinner in New York. This was before several chapters of your life unfolded, and it's great to be talking with you today.

You're doing something really interesting right now, trying to acquire and run eBay, which obviously is a big story right now. That takes us back 25–30 years to the start of the internet. But I want to talk a little bit about your story first, if that's okay. I'd love for folks watching or listening to learn a little bit about you and the journey you've been on that brings you to this moment.

Maybe we can go back to the business you started, Chewy, if that's okay.

Yes, definitely.

Maybe tell me why you started Chewy. How did you get that idea, and how did you get into building this business from where you were coming from at that time?

We wanted to build something online, and we were about to launch an online jewelry website. We didn't know anything about jewelry. We went to a bunch of trade shows, bought hundreds of thousands of dollars' worth of inventory, built the website, and had the distribution.

Then I was shopping in a neighborhood pet store. I had a poodle, and I was going every few weeks. It just hit me on one of my trips that I understood the product much better. It was a recurring-revenue purchase, and the market was still fragmented. The fact that there were still neighborhood pet stores at the time and that they hadn't been disrupted by Petco and PetSmart was fascinating to me.

You had Amazon, which was established and had pet products since the ’90s, but they hadn't really achieved real scale in the category. The vision was to replicate the same experience I had at the neighborhood pet store, but do it online and do it at scale.

I looked at Amazon for best practices when it came to supply chain: fast shipping, having a great selection, and being competitively priced. Then there was the experience at the neighborhood pet store of knowing the products really well. It was easy to be passionate about the pet category because I'm a pet owner, and everyone we hired were pet owners.

It was all about market leadership. It's a low-margin business. In hindsight, it wasn't necessarily the best idea to go head-to-head against Amazon selling 30-pound bags of pet food, but we executed really well, grew really quickly, and had negative working capital. It was a business that was able to get to billions of dollars in revenue without consuming a lot of capital.

How did you learn to execute well? At the time, you had little business experience prior to that. How did you learn those skills? What were the principles and values that made you excellent at operating that business?

I understood from the beginning that the real competition was always Amazon, and they were world-class when it came to supply chain. So we negotiated very fiercely with suppliers to get the best product cost. That meant getting to scale and going from buying pallets of dog food to truckloads of dog food, moving from distribution to direct, and buying more generally. The more you buy, the lower the prices are going to be.

We operated efficiently in the warehouses through labor optimization and warehouse-management optimization, and we got competitive prices with shipping carriers. It was a game of pennies. The goal was to grow quickly and establish market leadership, and the difference between failure and success was pennies in the red versus pennies in the black.

We had to operate hyper-efficiently, and there was a lot of competition in the space. It wasn't a novel idea. I was going head-to-head against Amazon, and Pets.com was in the backdrop. That made it very difficult to raise capital. But at a high level, the market underestimated not the size of the addressable market, but our execution.

As a customer, I've had lots of dogs, and it was always such a great consumer experience. Did you personally put your finger on that, or did you bring great people around you who understood the consumer side, apart from the supply-chain optimization, labor optimization, and getting the cash flows to work?

Was there a lot on the consumer-product angle that you spent time on with that business?

When we looked at the cohorts, you could see the customers were very sticky. I looked at it this way: The reason I moved from jewelry to pet food was because it was a recurring item. I loved the fact that it was consumable.

When we started Chewy, for the first few years we just focused on food, treats, litter—all of the things that people are buying all the time. The vision and the idea were that if we treated our customers well, they were going to continue shopping with us. And that's what we did.

It was everything from handwritten holiday cards to pet portraits to 24/7 customer service. If there was ever an issue, we took care of the customer. That's what happened, and the customers continued shopping with us.

The best referrals are word of mouth. Pet owners love to tell their friends and fellow pet owners if they have a great experience. So the thesis ultimately played out.

For those who don't know, you built and sold the business in 2017 for $3.35 billion. Subsequently, there was an IPO, and that business continued to trade up in value. You clearly executed well.

Help me understand how you built and managed the leadership team, the management team, and the people around you to execute so well. What did you learn as a manager, CEO, and operator when you were building Chewy?

Staying on top of everything. It's 24/7—watching all of the numbers. I would stay in Google AdWords until 4:00 or 5:00 in the morning, managing campaigns myself. I was negotiating directly with all of our major suppliers.

I had a supplier who told me during one of our negotiations—it was a 1-year contract—“I'm so happy this is over. I never have to talk to you for another year.” It was basically another year. He said, “I don't have to speak to you for the next year.” I said, “That was a compliment.”

Anytime someone else was doing the negotiation, it was counterintuitive. They wanted to build relationships with suppliers. The reality is that it's mostly transactional. If our suppliers are sending us gifts in the mail, that's a really bad sign. It means we're overpaying. If our suppliers are telling us they never want to speak to us again, it means we're getting the right price.

Getting people into that framework isn't easy because the path of least resistance is to get along and be nice. But when you're building a business and losing money, you've got to focus on sustainability. So it was about being on top of everything.

What about your people? I'm trying to understand your skill as a manager of people, because clearly you did something right. You continue to execute at GameStop, which we'll get to in a minute.

How do you find great people, and how do you hold people accountable? What management techniques have you developed for building and running a team?

I look for will over skill. I had a woman who was running customer service, as an example. She came from working in an old people's home, and she applied for the job many times. We didn't think she was qualified, and we looked over her résumé, but she kept applying. She was relentless.

On paper, she didn't necessarily have the right experience, but she had drive. She was motivated, she wanted to work, and she ended up being incredible.

In general, it was about finding people who were diehards, who were willing to put everything in and go all in—no pun intended—and basically be as psychotic as me. That was the team we put together. It was just a bunch of fellow psychopaths.

Psychopaths attract psychopaths, and the engine is running at that point.

Exactly. Exactly.

A's only put up with A's.

Exactly.

Do you regret selling Chewy when you did? It went public at about a $20 billion market cap, like 2 years later.

I mean, as soon as I sold it, it just—

Yeah.

Why? I mean, typically, if you talk to the investment bankers, they were like, “We're getting an amazing price,” and then all of a sudden it goes public at basically a lot more than what anyone had guessed.

So nobody has a crystal ball. Chewy was my baby. I put a lot of love into that business, and I love that business. Everything works out for a reason in life, one way or another.

Yeah.

And we wouldn't be having this conversation if I were still running Chewy. Or at least maybe we would, but it would be about dog food instead of something else.

We'll be talking about how you built a $100 billion market-cap dog food company, but—

Exactly.

So, after you sold it, you became a pretty active investor. Is that a fair statement about the next chapter for you?

I went activist for the first time, yeah. That's an accurate statement.

Well, you were pretty active generally. You would buy and hold concentrated positions in stocks. Is that fair at that stage? How did you pick companies? What did you look for, and how did you make the investments you made? Maybe you can walk us through a couple of the stories of what you went through at that stage.

I looked for established businesses that have a strong historical track record of making money and typically are out of favor when it comes to passive or activist investments. That's been my general framework.

Why did you choose to go activist when you started making these investments? Were you getting frustrated in conversations with management and deciding to take it public, or was there a model you were going after where you saw others have success publicly calling out issues in businesses and driving change?

When it came to GameStop, originally it was a passive investment. I owned under 5%, and the CEO actually reached out to me because they were fighting an activist and wanted me to join the board. They thought I was basically going to be their friend. They were like, “This guy owns a few percent of the company. Let's give him a board seat, and he'll help us basically fend off this activist.” So they kind of put the idea in my head.

This was around 2020, right?

Yes, exactly. My father had recently died, and they offered me a single board seat. I looked at the board, and they had a really large board. If I was going to do this, a single board seat just wasn't attractive. Then COVID happened, and things got a lot worse. GameStop was deemed a nonessential store and was basically on the verge of bankruptcy. The stock traded down significantly, and I continued accumulating.

I ended up going above 5%. At that point, I needed to decide whether I was going to file a 13G or a 13D. A 13G is basically if you want to be passive, which means you're not going to engage with the management team at all, and a 13D is where you are going to engage with them. That was an easy decision once I crossed over 5%.

I remember actually getting a call from the CEO of GameStop at the time. We were discussing me going above 5% and filing the required SEC forms, and he asked, “Did you file a 13D or 13G?” I said, “A 13D.” A 13D is intended to mean that you're going to be activist, even though it doesn't necessarily mean you need to be hostile. It just means you're going to engage with the management team. Anyway, that's what happened.

Going back to GameStop, how did you first identify it? The storyline is, “WallStreetBets put something on the internet, everyone starts paying attention to it, and it becomes a meme stock.” Was there fundamental unrealized value that you saw? You seem to be a real unrealized-value investor, is how I would describe it. Tell me if you disagree. There's real value in an organization that's not being realized—its potential. What did you see in GameStop? How did you first identify it, get involved, and start accumulating?

I found it fascinating that, for whatever reason—and still to this day—everybody hates the mainstream media. The general consensus has been that GameStop was going out of business a long time ago, right? Like, 15 years ago. This thing was basically shorted to oblivion. Everyone was betting against it, and everyone basically just hated it.

It's one of those things where, when you even say “GameStop,” everyone's like, “Really? You're an investor in GameStop?” For as long as I can remember, that's basically been the reputation. It's like the underdog. Everyone loves to take the other side of the trade or bet against it.

I like that. I like the idea of going into a situation where you're basically running into a burning house. I originally did it as an investor because typically that's where you see opportunities: when there's a lot of pessimism and fear. I ended up, not necessarily intentionally, joining the board and ultimately becoming the CEO, but that wasn't the original plan. The original plan was basically to be a passive investor, and I ended up becoming involved because there was no one else to do the job. Someone needed to do it, and here we are today.

Was there a thesis on value realization, or was it just that the market had the value wrong? Did you think at the time there were operational changes that could drive more value? Or was it just, “Hey, everyone's got this short. Everyone's got this on the wrong side”?

The original thesis was that there was an upcoming console cycle and that GameStop would probably survive until the new PlayStation and Microsoft Xbox came out. It was a very cyclical business, and GameStop typically does very well at the beginning of the console cycle, when the market is very tight and people are basically running to GameStop to buy hardware and software. That was the original thesis.

As I got pulled in, obviously the business became completely different and the thesis changed. But that's where I started as a passive investor.

So then they asked you to join the board, but you made the point that if you were going to be involved, you needed to have more board seats. Is that kind of how the evolution happened?

Yeah, they thought I was basically just going to join the board and be a patsy.

Right. And then you said, “You probably picked the wrong guy.” I think that was going to be the case. So then you went public with your views. Is that right? I think it was 2021, early 2021, when you joined the board with 2 other executives from Chewy—2 friends of yours, or 2 colleagues of yours. Is that right?

Exactly.

And then the stock took off, all of the hedge funds that were short had to cover, and the stock price just ripped.

Exactly.

This is the whole story. Then, in 2021, the company raised $1.7 billion, wiped out all the debt, and what was the plan at that point in the business cycle? Was there an investment and operating plan that you were trying to get the team to execute against?

The original plan? I learned a lot at GameStop. I went in with this bias from Chewy: everything that I learned at Chewy, I was going to apply to GameStop. It took me about—I don't know, maybe just over a year—to realize that was really, really stupid.

I ended up hiring a bunch of e-commerce people from Chewy and Amazon, and I wasn't the CEO. I hired a CEO, so I didn't have day-to-day visibility into what was going on. The strategy was to make GameStop more like Chewy, and that was the wrong strategy.

Once I became the CEO, I quickly adjusted because I looked at the financials and saw that it didn't make any sense. I went into maniacal cost-cutting and efficiency mode, basically focusing on what GameStop is really good at, which is the pre-owned side of things, and focusing on running the retail business very well. Ultimately, that led us to the collectibles category.

Today, the business is a leader in the collectibles category, and software makes up a very small percentage of the business. There were a lot of learnings along the way. You look at Chewy and GameStop and say, “Well, they're both retailers. You take the same playbook.” But that was not the case. They're totally different animals.

At Chewy, you've got repeat purchases and sticky cohorts, and we could never overbuy inventory because we would ultimately sell it. The revenues were growing, and we turned the inventory very quickly. Whereas we ended up buying all kinds of inventory at GameStop and having a bunch of TVs and other inventory get stuck in the stores. If you don't sell it, you end up losing a lot of money and marking it down.

There were a lot of learnings along the way for me to understand physical retail. When I became CEO, I had zero physical retail experience.

Did you think a lot about the different categories we could leverage the GameStop network, the stores, and the consumer into besides collectibles? How did you pick the expansion into collectibles versus any other sort of used category you might have been able to move into?

We were already in the category. We weren't deep in the category, and we did try a few different things within consumer electronics that just really didn't end up taking off like collectibles did. If you look at TCG in particular, we're now growing in sports as well, and it's been very, very popular.

So, we tried a few different things, and the trade-in model especially worked really well. Today, you could bring in a graded PSA card 8 and above, and we will give you cash on the spot. We buy back the card, and then we either sell it in the store or bring it back to our warehouses and sell it online.

That was very similar to the trade-in model that we had on both hardware and software, and it was very extendable to the trading cards category as well.

As you made this change, did you have to change the team a lot? The management team? What was the turnover like after you became CEO, both at the leadership level and below the leadership level?

It was identifying the talent at the company and basically having them work directly with me. The people who know GameStop the best have been the people who have been there for a long time, and me working closely with them ended up working really well.

You brought others, obviously, as well, to complement them.

Yeah, some, but generally it was working with the people who have been there and know the business really well.

Some folks who have managed multiple businesses or been CEO and applied their skills to different business lines—I interviewed Charles Koch a few weeks ago from Koch Industries. He's got a whole set of principles that he tries to apply to running a business, and those principles he's used to build, acquire, and operate multiple different kinds of businesses. He transforms the business by applying his principles to how he runs them.

Do you have a similar sort of framework or model or machine that you use for running the business, assessing what's working and what's not working, that you then bring to bear on GameStop, on Chewy, and maybe next on eBay—something that you've used repeatedly that works well for you? Or is everything truly a Zen Mind, Beginner's Mind, first-principles approach to thinking about the business?

I'm sure I do, but I'm not good at articulating it, so I don't know if I'm the right person to be able to say what's going through my brain. Sometimes, whatever I'm feeling, I can't even necessarily describe it, and if I describe it, it ends up being wrong. Someone else could probably do a better job answering that question than me.

What do you think someone else that's worked for you repeatedly would say it's like to work with you?

You'd have to ask them.

Okay. So, let's go through the—

Things. Hopefully not good things.

Yeah, the pressure's on.

The numbers speak for themselves in terms of what you've delivered at GameStop. I think collectibles is now 42% of revenue—$350 million in Q1. Revenue was $835 million. You grew at 14% year over year. You cut SG&A from $228 million to $202 million. You have $9.7 billion in cash, $333 million in free cash flow, and the board's just authorized a share repurchase.

It's pretty tremendous how you've operated this business. Help me understand a little bit: as you're building GameStop, operating it, and executing, what makes you lift your head up and say, “Hey, we should be doing acquisitions and looking at other things,” instead of just building everything organically in-house?

If you look at the size of the business that I can build organically with GameStop, it's nice. It's okay, but I like to do big things. Chewy is a good example. It could have been a $500 million business. It could have been a $100 million business. It could have been profitable if we had spent a lot less money on marketing, but life is too short to do it small.

If you look at how complementary these 2 businesses are, as we've gone into the collectible space, I've come to appreciate eBay differently. If you look at how complementary these 2 businesses are from a lot of different dimensions—the secondary-market side of the business, the collectible side of the business, and the ability to provide liquidity to consumers—what we're doing in stores, eBay is doing online.

Authentication of secondhand items. There are so many aspects of the businesses that are similar, except that eBay is global and has significant scale. Frankly, it's a business that I understand a lot better than physical retail because I know a thing or 2 about e-commerce, and it's an area where I'm much more comfortable operating.

When you look at how much the businesses together make sense, and then you look at the fact that it's within my circle of competence, I can't stop thinking about it. When I look at Chewy, in hindsight, we had a lot of competition in the pet space that was really well-funded, and they were decent operators. They didn't end up making it because it was a low-margin business going head-to-head against Amazon.

It's similar to the airline industry, where people don't really care about the actual airline they're flying. They're basically shopping by price.

Yeah.

Selling pet food online was not a great idea, and GameStop, I don't think, was such a good idea either. This is actually a really good idea, whether it ends up working out or not, but this is actually a really good idea. We'll see what happens.

Was there a moment you remember when you said, “We should make a play for eBay”? Do you remember that moment, when you were looking at the business or thinking about the business, when this idea sprung forth?

Yes, I do.

What was it?

I—

I was on the toilet.

Pretty much.

I'm assuming you've been studying the business because you're in the collectibles business and learning a little bit about it, and had this idea sitting there.

Yeah, I followed eBay for a very long time, and I came to appreciate their experience and their moat in the collectible space. But it's not just collectibles, either. It's the refurbished tech piece of the business, where—

Yeah.

GameStop has a big portion of our business, and it's a big portion of eBay's business, too. The secondhand business as well. There were other things that I thought about where I could personally add value and might make sense for GameStop, but this one made sense for me personally, and it makes sense for GameStop.

So, if you have studied eBay, what do you think the team did right in the early days? Was it simply the network effect and the business took off, and once they had the network, it was hard to break the moat? Was there anything about the formula or the consumer model or experience? You've said publicly that eBay looks a lot like it did in the early days. Was there something about early management, early design principles, early engineering—anything that happened in the early stages of eBay—that made it what it is today?

I look at basically the marketplace model, where they had first-mover advantage. Their ability to have first-mover advantage and really be the de facto marketplace online, including against Amazon, was significant. That was really helpful.

I wouldn't say that, if you look in general at the growth in e-commerce and you look at Amazon as an example, Amazon basically took the marketplace model but also took possession of first-party inventory, along with growing their marketplace. They ultimately scaled it, and they essentially did what Walmart was doing, but they did it online at scale. Obviously, you can't compare the 2.

Their focus on building a marketplace gave them a moat and staying power, but I wouldn't say that their execution was great. In the early days, it was great when it was founder-operated, but since then, if you look at how much e-commerce has grown and how much market share they've given up to basically everyone—new competitors in the space—live-shopping competitors picked off significant share from them. Shopify, social commerce, Amazon—eBay has been able to maintain a revenue base and generate earnings, but they haven't grown along with the rest of e-commerce.

If you look at how they've done most recently, the business has basically stagnated up until the last few quarters, and their operating expenses are up significantly. It's not to say that they aren't the de facto marketplace online, especially in certain categories, but that business should be significantly larger.

Do you think they missed the boat, and if so, why, on stores? Amazon stores and Shopify obviously have become categories unto themselves. All of those power sellers probably transitioned over to having stores at some point. What did eBay miss? Was it purely execution, and is there still an opportunity to win back that market?

eBay could have—I mean, I'm not advocating this. I would not go head-to-head against Amazon today, but eBay could have been Amazon.

When you look at what Amazon has built, everything from taking inventory to their principle that they provide a great customer experience—that's why we all love shopping on Amazon.

And as a seller, Seller Central is a very powerful platform, and sellers generally like it, too. I don't know if they necessarily like the margins, but they can move a lot of inventory on Amazon. eBay, by doing nothing, has basically carved out a niche in certain categories where Amazon isn't strong because Amazon is strong in other categories. You're buying a phone charger or new products; it's not necessarily the place where you want to search for a unique baseball card, a hard-to-find pen, or a used auto part.

I don't know if it was necessarily through strategy or just because they ended up defaulting into those categories because their largest competitor was focused on other things.

Do you think Amazon's over-earning right now? I think the point you made resonates with me. I've been involved in a number of businesses and been on the board of them, and I see the margin that Amazon takes from sellers. Everyone's frustrated about it. It almost feels to me like everyone's hungry for an alternative.

But the reason you stay on Amazon is the reach and the audience that you get with Amazon. There aren't a lot of other places that offer a competitive alternative to Amazon for those sellers. eBay's got a pretty big audience. Do you think that Amazon's over-earning in that sense, and is there an opportunity for eBay to step up and compete in that sense?

They charge a lot of money to their sellers. I agree with you. Sellers like it because they move a lot of inventory, but they don't like the margins.

The problem would obviously be inventory, right? If eBay were to go in that direction and you were running eBay, what do you think you'd do about inventory and logistics?

I would not be interested in taking in first-party inventory. I like the marketplace model.

The categories where eBay's doing well are categories where GameStop is doing especially well, too. Going head-to-head against Amazon is not the most attractive business.

eBay is notorious for having bought and then sold a number of big businesses. They bought PayPal and then later spun it out and divested it. They bought Skype for $2.6 billion in 2005 and then sold 70% of it for $2 billion in 2009. Then they got lucky with Microsoft overpaying in 2011, and they made another $2 billion on it. So, they netted a good profit on the Skype sale.

When you think about the audience that eBay has—the user base—there are a lot of ancillary businesses you could get into. When you look at PayPal and when you look at Skype, were those strategic errors or tactical errors? Meaning, were they good strategic moves but mismanaged and not well integrated or well run after the acquisition? What do you think happened there?

If you look at eBay today, I like focus. Them focusing on core eBay makes sense. My strategy at Chewy wasn't creating all these other sub-brands for different geographies. It was always focusing on Chewy.

The focus is helpful. I'd say in eBay's case, it hasn't resulted in significant GMV growth, if at all, or earnings growth, but I do like being focused. They've recently made acquisitions that don't make sense, but generally speaking, I like focusing on a singular brand. Especially with a business that's global, there's a lot of upside, and eBay plays in a ton of categories already. It's hard to do multiple things exceptionally well.

The other example, obviously, is StubHub, which they bought and then sold to the founder Eric at Viagogo for $4 billion, years later, but also didn't really transition well. Does that mean that eBay can't really do well in other marketplaces, or do you think it's about building the product organically in a better way to expand into other marketplace verticals?

Building it organically through eBay and through focus is where I believe makes the most sense.

What's happened with the business in the post-Donahoe era? He left, I think—what did he leave? 2015. It's been about 11 years. If someone were to ask you, "Give me your summary of what's happened to eBay in the last 11 years," how would you talk through what's happened in the business?

If you just look at how they've done since COVID, every important metric is down. GMV is down, active users are down by 30 million, and operating earnings are down. Revenue growth now is essentially flat. It's up a few points, and operating expenses are up significantly.

For a business that has no inventory, their operating expenses are over half of their revenues. That's a business that's not growing. Everybody else in e-commerce is growing, and they're making less money and spending a lot more.

Their sellers, frankly, aren't happy. You talk to sellers, and in order for them to do business on eBay, they have to use all kinds of third-party tools outside of eBay because eBay isn't even providing those tools. Amazon Seller Central is soup to nuts. You could pretty much do everything in Seller Central. With eBay, it's a pain.

They alienate their sellers. They had concierge programs for their top sellers, and now it seems like they take their sellers for granted and take advantage of them. In a marketplace model like eBay, the sellers are the customer. You make your sellers happy, you give them the tools, they bring more inventory online, and you ultimately end up doing more sales.

They're not working with their sellers to make them happy. It's not that complicated. You talk to the sellers on the phone, you talk to the top sellers, you ask them what the pain points are, and you get the engineering team on the phone with the sellers. You start basically banging them out.

I guess the existing management team doesn't roll up their sleeves. They're going to go to outside consulting firms to tell them how to run their business.

Is that what's happened? What you state seems obvious. Do you think management has simply been complacent and collecting a paycheck, with no one acting like an owner and no one actually knowing how to execute? Or do you think they fundamentally disagree with that strategy and those points that you're making?

They're never going to admit it, but I would bet everything that they're working with multiple outside consultants for a lot of different reasons, and they're not making their sellers happy.

Their sellers are on the platform because they do a lot of business on the platform and want to move product, but they don't feel like eBay wants to make them succeed or is working with them to do more business together.

That's what happens when you go from a business that's founder-operator-run to a business with a professional management team. You lose the one-on-one interaction and the act of rolling up your sleeves and really getting into solving the root cause of problems.

Do you believe in building long-range operating plans? Meaning, would you articulate a strategic vision for eBay and then write out what you're going to do over the next 3, 4, or 5 years so that the shareholders considering your acquisition offer can see both your vision and your plan for executing on that vision over the next several years?

Or are you much more of a responsive manager, where you're going to go in and diagnose and be more of a tactician, iterating the business toward success in an almost agile way? How do you think about presenting how you're going to be more successful in operating this business than the existing management?

There are 3 areas. Number 1 is immediately improving earnings through cutting costs and pulling $2 billion of costs out of the business. On an operating base of close to $5.5 billion of expenses, with $2.4 billion spent on sales and marketing for essentially no user growth, there's a lot of money to pull out there. So, you have the immediate increase in earnings through cost-cutting. That's 1.

Then there are 2 growth vectors that I'm very much interested in. Number 1 is live commerce. There's a large competitor that's completely crushing it. eBay has the users. eBay has the brands. They have a platform, but the platform sucks for a lot of different reasons.

They don't have the content creators on the platform, and nobody even really knows eBay Live exists. There's an application process. I talk to sellers, and they're telling me they've applied to be a seller and are waiting to get approved. They're basically stopping themselves from being successful and getting content creators onto the platform. The entire back end of eBay Live also sucks.

Live commerce's TAM is about $400 billion. It's growing very quickly in the U.S. and is very popular in Asia. eBay Live should be significantly larger. They should be the category leader in the space. At most, they have a few hundred people watching their sales.

That's a huge growth opportunity for them to start doing really well in live commerce. The benefit we also have with the stores, beyond basically fixing the front end and back end of the platform, is that there are 1,600 essentially nodes that can be used as studios for creators. They could be used for fulfillment and logistics, ultimately allowing sellers and content creators to do what they do best, which is create content. We can help them with photography, fulfillment, and logistics.

And we can also do the authentication. That extends to the marketplace model as well. I would focus a lot on growing the live-commerce side of things beyond the cost-cutting.

The third thing is something that I have not spoken about publicly before. eBay today is the leader in physical items, physical collectibles as an example. I would extend that into digital collectibles.

Essentially, if you look at all of these in-game items in AAA titles that people are accumulating—skins, weapons, all of these things—you could take eBay and build a marketplace where you provide liquidity for in-game digital items. Essentially, it’s what people thought NFTs could have been, but ultimately, they had no real utility. In-game items actually have real utility.

If you look at all of these collectibles, frankly, they’re an ego play. You own art—what is that? At the end of the day, it’s an ego play. If you look at trading cards, it’s a piece of cardboard in a piece of plastic. They’re very, very, very popular, but there’s no real utility to them other than being able to tell people you’ve got a really unique trading card.

But if you look at in-game digital items, there’s no marketplace providing liquidity for them. I would use eBay to provide liquidity for in-game digital items. I believe that addressable market could be much larger than eBay’s marketplace for physical items, and no one’s doing it. This should already exist. It’s crazy that it doesn’t exist.

The eBay board has rejected your offer. Is it that they’re looking at Ryan Cohen saying, “Hey, you’re a guy who ran Chewy for a few years and sold it, and you’ve been running GameStop. You’ve never really operated a business of this scale. We’re not going to hand over our shares for your shares and put you in charge of this overall enterprise. You don’t have the experience, skills, or competency”? What’s their rationale for rejecting your bid, and what’s the frank feedback you’ve heard, either behind closed doors or through third parties, about what’s going on here?

Well, they put out a rejection letter that said our offer was incredible. There was a lot of uncertainty, and frankly—and, by the way, this is expected—they don’t want to hand over the reins. They’re making a lot of money, so I completely understand why they’re taking the position they’re taking.

But they spelled it out in the rejection letter. Number 1 was the financing uncertainty, which, frankly, if we can’t get the financing, it means that eBay can’t get the financing because we’re getting the financing off eBay’s balance sheet. But there has not been very much engagement from management or the board. Frankly, there’s been no engagement. They’re playing games. They pointed us to their high-priced advisers, and then when we reach out to schedule a meeting, they don’t schedule the meeting.

So, when you first started having this idea, sitting on the john, and you thought, “I’m going to move forward with this thing,” I’m assuming at some point you called bankers and talked about the structure to figure out how to put this bid together. Where did you go down the path of saying, “Let’s do half cash, then convince them to take our stock and basically roll their stock into our stock and let us run the business,” versus raising the capital to do an all-cash offer for the company?

Is it impossible for you guys to convince shareholders, investors, capital providers, large institutions, banks, lenders, and so on to put together a syndicate of $56 billion of cash so you could make this an all-cash offer for the company, which would make it a lot harder for them to simply reject so easily? Maybe you can walk us through the banker conversations and the process you’ve gone through in thinking about the structure here.

Ultimately, the decision is: Who do you want to run the business? Who do you think is more competent to run the business, and who’s going to maximize shareholder value? By giving existing shareholders GameStop shares—the combined company’s shares—at least in the very near to medium future, the earnings are coming from eBay. So, they’re going to continue owning eBay.

We’re offering them 50% cash and 50% stock at a premium to where we bought it. Essentially, they get to continue owning eBay, except you’ve got someone who is highly incentivized to maximize shareholder value, knows a thing or two about e-commerce, and can run the business efficiently.

But why not go all cash, Ryan? Why not raise the capital? If you can raise half the cash to do the bid, why not raise all the cash—sell your shares, sell GameStop shares to investors who are aligned with you to raise the cash, rather than the investors who own those eBay shares—and then go make them an all-cash offer?

That is not what we’ve presented today, and that’s a lot of cash to come up with. We don’t have $60 billion of cash just lying around.

Right. Well, tell me about the owners. Have you spoken to any of eBay’s shareholders, and do you have a view on how they’re thinking about voting their shares? My understanding is there was recently a rejection of the ability to call a special shareholder meeting. There was a vote that failed to reduce the threshold to 10% of shares outstanding; it’s currently at 20%.

So, that failure means you cannot call a special shareholder meeting without 20% of the shares calling for it. Is that right?

Yeah, it was close. It was close, but that’s right.

And so, if you go through and start talking to the actual owners of eBay today, because it’s a pretty broadly owned, institutionally owned stock, have you started having those institutional conversations to see where folks are and how they’re feeling about management, and how they’re feeling about your strategy and your ability to deliver value for them over the next couple of years?

Yeah, I don’t want to get into individual shareholder discussions, but—

Yeah.

The consensus has generally been aligned: They love the business, and they see a lot of opportunities. We’ll see what ends up ultimately happening, and maybe the composition could shift because, if you love the business, you might not want 50% cash. You might want to stay invested. That’s a possibility, too.

Ultimately, the vote is on who’s going to be a better fiduciary of capital and who can grow this business: me, or someone who’s basically selling stock hand over fist and, by the way, has not bought a single share of stock in the open market with his own money. He’s been selling tens of millions of dollars.

The interesting thing in this—and maybe you can help me understand this—is that there’s no question that what we’re doing, what I’m doing, is big. It’s not every single day that something like this occurs. But why does everybody want us to fail? Why does everyone want GameStop to fail?

Why is everyone—the media, as an example—wanting a management team with no skin in the game to succeed? They’re not builders. They haven’t built anything themselves before. They’ve basically just been employees at major companies, and they’ve been overpaid. I don’t think they’ve ever broken out in a sweat in their entire lives. Why does everyone want them to succeed?

But when you have someone who is doing something like this—and, by the way, this is going to be coming out; it hasn’t been filed yet. Maybe by the time this airs it will be—but I’m putting $500 million of my own money into this transaction. I haven’t pulled a penny out of GameStop. I’ve invested a lot of money into GameStop, and I’ve been doing it for a long time. GameStop’s a much stronger business today.

Everyone hates GameStop, and it seems like everyone in the media basically wants us to fail and wants them to succeed. You’ve got a board that’s making hundreds of thousands of dollars a year. They don’t buy stock with their own money. They end up showing up to a handful of board meetings, and they’re making a fortune.

You’ve got a management team that’s grossly overpaid and taking zero risk. Why does everyone basically want this entrenched management team and board to stay protected and continue running the business? There’s nothing more American than risking your own capital. So, why does everyone want us to fail?

Commentators, what’s your theory? I don’t know. Have you sat down with their CEO? I would love to. He won’t take the meeting? I will fly to California tomorrow. No.

And I mean, you’re the guy that’s going to fire him, but he’s going to get a payday, right?

A big payday.

A big payday. What’s his parachute?

Parachute.

Do you know what the parachute is for him?

It’s over $100 million.

So, he’ll get $100 million to walk away.

Yeah.

Have you met with any of the board members?

No.

They won’t take the meeting. Have you reached out?

Yeah.

The great thing about markets is that they don’t care what the media says. In the short term, they might. It’s a voting machine, but in the long term, it’s a weighing machine. If the performance continues to be delivered at GameStop, people who might want to see the company fail are going to lose because you’re going to get the weight, right? That’s ultimately what’s going to matter more than anything here.

But I would assume that, at this point, seeing the results at GameStop, folks have to start paying attention that this isn’t just a meme stock.

I do think that the media, in order to give you credibility—and this would be my take on this—is going to have to acknowledge that all of their takes on GameStop just being a meme stock were wrong. There is actually a business here, and there is value being created here. They missed that, and they got the story completely wrong.

To recognize that, and to recognize your competency as an executive and as a CEO, and as someone who can run eBay better than the installed management, makes them wrong in their assessment of how the cards were all laid out on the table. That would be my theory about all this, because everyone got caught up in the frenzy of the meme-stock craze, saying, “Hey, this is all just fake. It’s not real.” And everyone agreed with that. Once everyone agrees with it, no one’s allowed to rewrite history. No one can ever say that they were wrong about COVID. You can’t have everyone say that they were wrong about GameStop because it ruins their credibility. To maintain their credibility, they have to continue to make you seem less credible. That would be my take on it.

Yeah. Yep.

So, your next steps: you’re going to go hostile? You’re going to do a tender? I mean, how’s this going to go?

I’m going to do whatever we need to do, whatever I need to do in order to succeed.

But you’re committed. Clearly.

Yeah.

If I’m their bankers, I get hired to run a process and maximize shareholder value. Those bankers then try to negotiate with you, but the truth is, if there are no other bidders, they’re just negotiating against themselves. Is that fair to say? Are there other bidders that could emerge here who could beat this price that you’re offering, that could beat this offer that you’re putting on the table?

Well, it’s a lot of money. It’s a big premium. Beauty is in the eye of the beholder, and it makes sense for me to pay this for the business because of what I could do with the business—not just in the short term, in terms of increasing the earnings, but in the long term, in terms of really taking significant market share in live commerce and building a digital marketplace for gaming. That’s something an existing management team would never be able to build in their wildest dreams. And so, it’s worth it for me to do something like that.

And then, obviously, when it comes to their large competitors, there are antitrust issues in terms of them being able to do a deal of this size as well. But I don’t know why they won’t speak to me. They should, because I’m not going to stop. I’m not going to go away.

Another option. Yeah, I mean, people could come along and buy the shares on the open market, too, and vote in favor of your offer. This is what often happens in these sorts of situations historically: the shareholder base can turn over. If people like the premium on the stock today and they don’t want to own GameStop stock tomorrow, there’s probably going to develop a good market for trading the shares if the market starts to believe your story, I would imagine, right? So, that might happen here as well.

There are a lot of different escalation paths that we have in our toolkit.

And we’ll see them. Are you working with bankers? Are you doing this alone?

Yeah, we’re working with bankers and high-priced advisors.

Ryan, this has been awesome—to get to know you and hear about your history and your vision for where you want to take GameStop and eBay. Really, man, the best of luck to you in the process, and thanks for speaking with us.

I appreciate it. Great speaking to you, Dave.