GameStop CEO Ryan Cohen's $56B Plan to Take Over eBay

**Ryan Cohen** (0:00)
Everyone hates GameStop, and it seems like everyone in the media basically wants us to fail and wants them to succeed. And 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 is grossly overpaid. There's nothing more American than basically risking your own capital. So why does everyone want us to fail?

**David Friedberg** (0:31)
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**Ryan Cohen** (1:10)
Thank you for having me.

**David Friedberg** (1:11)
I think it's been like 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.
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 that are watching this or listening to this 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.

**Ryan Cohen** (1:54)
Yes, definitely.

**David Friedberg** (1:56)
Yeah, well, maybe tell me why you started Chewy. How'd you get that idea and how'd you get into building this business from where you were coming from at that time?

**Ryan Cohen** (2:07)
We wanted to build something online and we were about to launch an online jewelry website. Did not know anything about jewelry, went to a bunch of trade shows, bought hundreds of thousands of dollars worth of inventory, built the website, had the distribution, and then I was shopping in a neighborhood pet store. I had a poodle and I was going every few weeks.
He just hit me on one of my trips that I understood the product much better. It was a recurring revenue purchase. The market was still fragmented. The fact that there was still neighborhood pet stores at the time and they had not been disrupted by Petco and PetSmart was fascinating to me. Then 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 that I had at the neighborhood pet store, but do it online and do it at scale.
I looked at Amazon's best practices when it came to supply chain, so fast shipping, having a great selection, being competitively priced and then the experience at the neighborhood pet store of knowing the products really well. It was easy to be passionate about the category because I'm a pet owner and everyone we hired were pet owners. And it was all about market leadership as a low margin business. Hindsight not necessarily the best idea to go head to head against Amazon selling 30 pound bags of pet food, but we executed really well and we grew really quickly. And we had negative working capital. And so it was a business that was able to get billions of dollars in revenue and not consume a lot of capital.

**David Friedberg** (4:07)
How did you learn to execute well? So at the time you had little business experience prior to that. How did you learn those skills? What were the principles and the values that that made you excellent at operating that business?

**Ryan Cohen** (4:22)
I understood from the beginning that the real competition was always Amazon and they were world class when it comes to supply chain. So negotiating very fiercely with suppliers to get the best product costs and that meant getting to scale and going from buying pallets of dog food to truck loads of dog food and moving from distribution to direct and buying generally, the more you buy, the lower the prices are going to be. Operating efficiently in the warehouses and so labor optimization, warehouse management optimization, getting competitive prices with shipping carriers. It was a game of pennies and we were, the goal was to grow quickly and establish market leadership and the difference between failure and success was, pennies in the red is failure and pennies in the black is success. So we had to operate hyper efficiently and there was a lot of competition in the space. It wasn't a novel idea. It was going head to head against Amazon and pets.com was in the backdrop.