GameStop CEO Ryan Cohen's $56B Plan to Take Over eBay
Ryan Cohen (speaker A) — Chewy founder, now Chairman/CEO of GameStop — with David Friedberg, on his **$56bn bid to acquire and run eBay**, and the operator playbook behind it. The Chewy lesson is brutal execution against Amazon ('a game of pennies' — red is failure, black is success): negotiate suppliers so hard that **'if our suppliers are sending us gifts in the mail... we're overpaying; if they never wanna speak to us again, we're getting the right price'**, hire for **'will over skill'**, and build a team of 'fellow psychopaths' where 'A's only put up with A's.' His investing instinct is contrarian — **'I like... running into a burning house'** (GameStop, universally hated and shorted) — and his honest GameStop confession is the most useful bit: he wasted a year trying to turn GameStop *into* Chewy before realising physical retail is 'a totally different animal,' then cut costs maniacally and pivoted into collectibles (now 42% of revenue, $9.7bn cash, FCF positive, buyback on). The eBay thesis: a first-mover marketplace with a real collectibles moat that **stagnated once it went from founder-operated to professional management** — GMV down, ~30m fewer active users, opex over half of revenue for a no-inventory business, and sellers ('the customer') alienated. His three-part plan: pull **$2bn of costs**, win **live commerce** (a ~$400bn TAM where eBay Live 'sucks'), and — never said publicly before — build a **liquidity marketplace for in-game digital items** ('what NFTs could have been but had no utility... in-game items have real utility'). The deeper through-line is **skin in the game**: he's putting **$500m of his own money** in, against a board and management who 'don't buy stock with their own money' — 'there's nothing more American than risking your own capital.' Buffett's frame closes it: a voting machine short-term, a weighing machine long-term.
Key points
- Chewy was won on execution, not novelty: a low-margin, negative-working-capital business that scaled to billions against Amazon by treating supply chain as 'a game of pennies' — and the supplier-negotiation tell, 'if our suppliers are sending us gifts in the mail... we're overpaying; if they never wanna speak to us again, we're getting the right price.'
- Hiring philosophy: 'will over skill' — the customer-service hire from an old-people's home who applied relentlessly and became great; build a team of 'diehards'/'fellow psychopaths' because 'A's only put up with A's.'
- Contrarian entry: he buys established, out-of-favour businesses — 'I like... running into a burning house' — GameStop being the canonical case (universally hated, shorted to oblivion); opportunity lives where there's pessimism and fear.
- The honest GameStop confession: he spent ~a year trying to turn GameStop into Chewy (hiring Chewy/Amazon e-commerce people) before realising it was 'really, really stupid' — physical retail is a different animal (sticky recurring revenue vs 'shit inventory' that gets stuck in stores) — then cut costs hard and pivoted to collectibles.
- GameStop today: collectibles ~42% of revenue (~$350m), Q1 revenue $835m (+14% YoY), SG&A cut $228m→$202m, $9.7bn cash, $333m FCF, buyback authorised — extending the trade-in model to graded PSA cards (cash on the spot, resell in-store/online).
- eBay diagnosis: a first-mover marketplace with a genuine collectibles moat that stagnated once it shifted from founder-operated to professional management — post-COVID GMV down, ~30m fewer active users, operating expenses over half of revenue for a business that holds no inventory, and unhappy sellers forced onto third-party tools.
- Marketplace first principle: 'the sellers are the customer' — make them happy, give them tools, they bring inventory, you do more sales; eBay instead 'takes their sellers for granted,' the symptom of management that goes to consultants rather than rolling up sleeves to solve root causes.
- The three-part eBay plan: (1) pull $2bn of costs (a $5.5bn expense base, $2.4bn on sales/marketing for no user growth); (2) win live commerce (a ~$400bn TAM where eBay Live 'sucks', using ~1,600 stores as creator studios/fulfilment); (3) the unannounced wedge — a liquidity marketplace for in-game digital items (skins, weapons), 'what NFTs could have been but had no utility... in-game items have real utility,' a market 'no one's doing.'
- Skin in the game is the whole pitch: he's putting $500m of his own money into the deal, has never pulled a penny out of GameStop, against a board/management who 'don't buy stock with their own money' and a CEO with a >$100m parachute — 'there's nothing more American than basically risking your own capital'; markets are 'a voting machine short-term, a weighing machine long-term.'
Notable quotes
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 wanna speak to us again, it means we're getting the right price.
I look for will over skill.
I like the idea of going into a situation where you're basically running into a burning house.
life is too short to do it small.
the sellers are the customer. You make your sellers happy, you give them the tools, they bring more inventory online, and you end up ultimately doing more sales.
if you look at in-game digital items, there's no marketplace that is providing liquidity for them.
there's nothing more American than basically risking your own capital.
that's what happens when you go from a business that founder-operator-run to business with a professional management team
Themes
- the activist-operator playbook
- founder-operator vs professional management
- contrarian / out-of-favour investing
- marketplace mechanics (sellers as the customer)
- the in-game digital-collectibles wedge
Mentioned
Companies
Ideas
- will over skill
- supplier negotiation as a game of pennies
- running into a burning house (out-of-favour investing)
- founder-operator vs professional management
- sellers are the customer
- skin in the game / risking own capital
- in-game digital-collectibles liquidity wedge
- live commerce opportunity
- focus over sub-brands
- voting machine vs weighing machine
- circle of competence
- life is too short to do it small