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

And you've got a board that's making hundreds of thousands of dollars a year and 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 foreshare and you've got a management team”

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“Ryan Cohen welcome to the all-in-interview. Thanks for being here. Thank you for having me. I think it's been like a decade”

Which is crazy how old we yet 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, and 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 Yes, that's fine. Yeah, well, maybe tell me why you started chewy. How do you get that idea and how do you get into building this business From where you were coming from at that time we were 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 about hundreds of thousands 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 and Hit 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 pecko and pet smart was fascinating to me and then you had it eat you had Amazon Which was established and had pet products since the nineties, but they hadn't really achieved real scale in the category so 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 and

I looked at Amazon is brought best practices when I 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 and It was easy to be passionate about the category because I'm a pet owner and everyone we hired were pet owners and He was all about market leadership as a low margin business hindsight not necessarily the best idea to go head to head again

Thames on 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 as a business that was able to get Billions of dollars in revenue and and not consume a lot of capital 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. I understood from the beginning that

Are the real competition was always Amazon and they work 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 Palettes of dog food to truck loads of of dog food and moving from distribution to direct and buying Generally more you buy the lower the prices are going to be operating efficiently in the warehouses and so

It was a game of pennies and we hit you know, we were the goal was to grow quickly and establish market leadership And the difference between failure and success was You know pennies in the red is failure and and pennies in the block is success. So We had to operate hyper efficiently and there's a lot of competition in the space. It was in a novel ideas going head to head against Amazon and pets.com was in the backdrop

So it made it very difficult to raise capital, but I'd say at a high level the market underestimated Not not the size of the addressable market, but our execution

“You know as a customer I've had lots of dogs. It was always such a great consumer experience. Did you personally put your finger on that or did you bring great people around you that understood consumer?”

Apart from the supply chain optimization the labor optimization getting the The cash flows to work right was there a lot on the consumer product angle that you spend time on with that business when we looked at The coharts you could see the customers were very sticky and the I looked at it the reason why I moved from jewelry rate of pet food was because it was a recurring item

So I love the fact that it was consumable and 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 so The the vision and the idea was if we treat our customers well, they're gonna continue shopping with us

“and and that's what we did and so is everything from the handwritten holiday cards to the pet portraits to”

24/7 customer service and If there was ever an issue, you know, we took care of the customer and That that's what happened and and the customers continued shopping with us and and the best referrals are a word of mouth and pet owners

love to tell their friends and fellow pet owners if they have a great experience so the thesis ultimately played out

So for those who don't know you built and sold the business in 2017 for 3.35 billion dollars

Subsequently there was an IPO and that business continued to trade up in value So you clearly executed well, but it helped me understand how did you Build and manage the leadership team the management team and the people around you to execute so well. What did you learn as a manager as a CEO as an operator When you were building chewy sting on top of everything just it's 24/7

Watching all of the numbers. I mean, I would Stay in Google ad words till four or five in the morning managing campaigns myself I Was negotiating directly with all of our major suppliers. I had a supplier that told me during one of our negotiations actually Said it was like a one or one year contract then he's like I'm so happy. This is over

I never have to talk to you for it. Well, it was it was basically another year

He's like I don't have to speak to next year It's like that was a compliment. I would and anytime someone else was doing the negotiation I mean, it's counterintuitive they want to build relationships with suppliers the reality is is It's mostly transactional and so 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 by getting people into that framework is not easy because the The path of least resistance is basically to get along and and to be nice but unfortunately When you're building a business and you're losing a money you got to focus on on Sustainability so just Being on top of everything and what about on people? I'm just trying to understand your your skill as a manager of people because clearly

You did something right continue to execute a game stop which will get to in a minute and I'm trying to understand

“How do you find great people and how do you hold people accountable and what are managing techniques that you develop for building a team and running a team?”

I look for will over skill and I had a woman that was running customer service as an example and she came from She was working in like an old people's home and

So 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. So I mean, it was in general. It was finding people that are

Diards that are just willing to put everything in go all in no pun intended And basically be as psychotic as as me and that was the team that we put together was just a bunch of fellow psychopaths And psychopaths attracts psychopaths and the at the engine is running at that point exactly exactly A is only put up with a is exactly

“Yeah, and do you regret selling chewy when you did?”

Because I mean, I want public at like what 20 billion market cap like tears later Yeah Well, you will liability. You know, I'm like what happened. Why so I mean

Typical if you talk to the investment bank or is there or like you know, we're getting a back an amazing price and then all of a sudden it goes public

And there's basically a lot more than what Anyone had guessed. So nobody has a crystal ball Chewie was my baby. I put a lot of I love that business and So yeah, and everything everything works out for a reason and life one way or another

Yeah, and we wouldn't be having this conversation if I was still running chewy. So I or at least Maybe we would but it would be a bad dog. We might be talking about how you built a hundred billion dollar market cap dog's

“Our company, but so after you sold it you kind of 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 that's a that's an accurate statement Well, you were like a pretty active like just general like you would buy and hold concentrated positions and in stocks is that is that fair? That's it. How did you pick companies? So what do you look for and how do you make the investment you made? Maybe you can walk us through a couple of the Stories of what you you went through at that stage. I looked for a 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 kind of investments and so That's been my general framework. Why did you choose to go activists when you kind of started making these We're getting frustrated and conversations with management decided to take a public or was there a model that you were kind of going after where you saw others have success with publicly calling out issues and businesses and driving change?

Well, when it came to game stop originally it was a passive investment and I own under 5% and the CEO actually reached out to me because they were fighting an activist and they wanted me to join the board. They thought I was basically going to be their friend. They're like oh, this guy owns a few percent of the company and let's give him a board seat and he'll help us basically fend off this activist and so they kind of put the idea in my head. This is around 2020, right?

He was yes exactly. So I was in in a place. My father had just died recently and they offered me a single board seat and I'm like if I'm going to do this, you know, I looked at the board and they had a really large board and they're offering me a single board seat and it just wasn't attractive.

And then, you know, COVID things got a lot worse. They were deemed a non-essential store

basically like kind of on the verge of bankruptcy. The stock traded down significantly and then I continued accumulating. I ended up going about 5%. At that point, I needed to decide,

“am I going to file a G or D? A 13 G is basically if you want to be passive, which means you're not”

going to engage with the management team at all and a D is where you are going to engage with them. So that was an easy decision once I crossed over 5%. And I remember actually getting a call from the CEO game stop at the time and he's like, yeah, we were discussing me going above 5% and filing the required SEC forums and he's like, did you file a D or a G? Like a D? And a D obviously is,

you need to be hostile. It just means you're going to engage with the management team.

So anyway, basically that's that was what happened. But going back to the game stop, how did you

first identify game stop? Because the kind of storyline is, hey, Wall Street bets put something on the internet and everyone starts paying attention to it and becomes a mean stock. Was there fundamental unrealized value you saw? Because you seem to be a real kind of unrealized value investor. It's how I would kind of describe, tell me if you disagree that there's real value in an organization that's not being realized. It's potential. What did you see in game stop? How did you

first identify it and get involved and start accumulating? I founded fascinating that everybody was like, for whatever reason and still to this day, everybody hates like the mainstream media, the general consensus has been that game stop is going to be his go.

Was going out of business like a long time ago, right? Like 15 years ago. This thing was basically

shorted to oblivion and everyone was betting against it and everyone's basically just hated it. It's one of those things where when you even say game stop, everyone's like, yeah, like really

“you're an investor in game stop. So that's always for as long as I remember, that's basically”

been the reputation is like the underdog, everyone loves to take the other side of the trade or bed against it. And so I liked that. Like I liked the idea of going into a situation where you're basically running into your running into a burning house and I originally did it as an investor. Because typically that's where you see opportunities is when there's a lot of pessimism and fear

and then you know, I ended up basically not necessarily intentionally

joining the board and then ultimately being the CEO. But that wasn't the original plan. The original plan was basically to be a passive investor and then I basically ended up just like there was no one else to do the job. So someone needs to do it. And here we are today.

“Was there a thesis on value realization or was it just about the market had the value wrong?”

Did you think at the time there was operational changes that could drive more value? Or was it just like, hey, everyone's got this shorter to everyone's got this to the wrong side? The original thesis was that there was an upcoming console cycle and that they're probably going to survive until the upcoming console cycle and the new PlayStation and Microsoft Xbox comes out and it was a very cyclical business and GameStop typically does very well in the

beginning of the console cycle when the market is very very tight and people are basically running a game to GameStop to buy hardware and software. And so that was that was the original thesis. And then as I got pulled in, obviously the business is completely different and the thesis has changed, but that's where I started as a passive investor. So then they ask you to join the board, but you make the point, hey, if I'm going to be involved, I need to have more board seats.

Is that kind of how the evolution? Yeah, I thought I was going to be just going to join the board

“and be a patty. Right. And then you said, you brought us to the wrong, yeah, I think that was going”

to be the case. So then you went public with this. Is that all right? Yeah. And kind of. So I think it was 2021, like early 2021, you joined the board with two other executives from Chewy, two friends of yours or two, two colleagues of yours. Is that, is that right? Exactly. And then the stock took off and all of the hedge funds that were short had to cover and the stock price just ripped. Exactly. And this is the whole story. So then in 2021, the company raises billions, seven wipes out all the debt.

And what was the plan at that point in the business cycle? Was there an investment operating plan that you were trying to get the team to execute against the original plan? I learned a lot and game stop. I basically took, I went in and I had this bias from Chewy, which is basically like everything that I learned that Chewy was going to apply to game stop. And it took me about, I don't know, maybe just over a year to realize that was really, really stupid. But I ended

up hiring a bunch of e-commerce people from Chewy and Amazon. And I wasn't the CEO. I hired a CEO.

make game stop more like Chewy. And that was the wrong strategy. And once I became the CEO,

“I quickly adjusted because, I mean, I just frankly, I looked at the financials and saw it didn't”

make any sense. And then it was, you know, went into a maniacal, cost-cutting mode, efficiency,

basically focusing on what game stop is really good at, which is the pre-owned side of things.

And focused on running the retail business very, very well. And then ultimately that led us to the category of collectibles, which, you know, today the business is a leader in the collectibles category and software makes up a very small percent of the business. But there were a lot of learnings on the way. And you look at basically Chewy and Gamesop, you say, well, they're both retailers. You take the same playbook. But that's not, that was not the case. Totally different at a mall.

And, you know, one is, you've got repeat purchases and you've got these really sticky cohorts.

And, you know, we can never over buy inventory, for instance, at Chewy, because, you know,

we would end up ultimately selling it. The revenues were growing. And we turned the inventory very, very quickly, whereas we ended up buying all kinds of sh*t inventory at GameStop and ended up having a bunch of TVs and inventory that ends up getting stuck in the stores. And if you don't sell it, you end up basically taking down, you know, losing a lot of money and marking it down. So, a lot of learnings along the way for me to understand physical retail, which when I joined the

board, when I became CLI, zero physical retail experience. So, did you think a lot about here the different categories we could leverage this GameStop network, the stores, the consumer into besides collectibles? How did you kind of pick the expansion into collectibles versus

“any other sort of used category you might be able to kind of move into?”

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

the trade-in model, especially, you know, worked really well where like today, you could basically

bring in a, not basically. You can bring in a graded PSA card, 8 in above, and we will give you cash on the spot, we buy back the card, and then we either sell it in the store, we bring it back to our warehouses and we sell it online. So, 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, management team? I mean,”

what was the turnover like after you became CEO at the leadership level and then below the leadership level? It was identifying the talents at the company and basically having them working directly with them, like that the people who know game stop the best have been the people that have been there for a long time and me working closely with them ended up working really well. You brought another, obviously, as well, to compliment them? Yeah, some, but I mean, generally

you're working with the people that have been there that know the business really well. Yeah, some folks who have managed multiple businesses or been CEO and applied their skills to different business lines, you know, I interviewed this guy Charles Koch a few weeks ago from Koch industry. 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 and acquire and operate multiple different

kinds of businesses and 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, what's not working, that you then bring to bear on game stop on chewy and maybe next on eBay that you've used repeatedly that works well for you

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 like whatever I'm feeling, I can't even necessarily describe it and if I describe it, it ends up being wrong. So someone else could probably do a better job of 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

“you have to ask them. Okay, so let's go do the good things. Hopefully not good things.”

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“with 835 million. You grew at 14% year over year. You cut SGA from 28 to 202. You have 9.7 billion”

in cash, 333 million in free cash flow and the boards just authorized to share repurchase. So it's

pretty tremendous how you've operated this business. So 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. And you know, 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 would have spent a lot less money on marketing. But life is too short to do”

it small. So we have the, if you look at how complimentary and as we've gone into the collectible space, I've come to appreciate eBay differently. And if you look at how complimentary these two businesses and from a lot of different dimensions, the secondary market side of the business, the collectible side of the business, the ability to provide liquidity to consumers, what we're doing in stores, eBay is doing online, authentication of secondhand items. There's so many aspects of the business,

that are similar except that eBay is global and has significant scale. And frankly, it's a business that I understand a lot better than physical retail, because I know a thing or two-a-body commerce. And it's an area where frankly, a much more comfortable operating. And so when you look at how much the business is together makes sense. And then you look at the fact that it's within my circle of competence. It's all, I can't stop thinking about that. So I look at Chewy as like,

Chewy in hindsight, we had a lot of competition in the pet space that were really well funded. And they were decent operators. And they didn't end up making it because they was a low margin business going ahead to head against Amazon. And it's similar to like the airline industry where people don't really care about the actual airline they're flying, they're just basically shopping by price. So that was selling pet food online, not a great idea. And game stop, 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 were kind of looking at the business or thinking about the business when this idea kind of sprung

“forth? Yes, I though. What was it? I was on the toilet. Okay. And you were just thinking about it?”

Pretty well. 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 mean, I followed eBay for a very long time and I came to appreciate their experience, their their their mode in the collectibles space. But it's not just collectibles too. I mean, it's the refurbished tech piece of the business where game stop, it's a big portion of our business, it's a big portion of of eBay's business,

too, in the second hand business as well. So there were other things that I thought about where

I could personally add value and might make sense for game stop, but this one made sense for me

“personally and it makes sense for game stop. 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 vote. Was there anything about the formula or the consumer model or experience? Because you've said publicly, hey, eBay, it 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, you know, I look at basically the marketplace model where they had first mover advantage. So

their ability to have first mover advantage and really be the, like, de facto marketplace online including against Amazon was, was significant. So 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 that basically took the marketplace model but also took taking possession of first party inventory along with growing their marketplace and like they ultimately scaled it and they essentially did

what Walmart was doing but they did it online in that scale. I mean, obviously you can't compare the two. But they, they, they're focused on building a marketplace, gave them a mode and staying power. But I wouldn't say that their execution was great. In the early days, it was great when it was found or operated. But since then, if you look at how much e-commerce is grown and how much market share they've given up to the likes of basically everyone new competitors in the space that

are very category focused. Life shopping competitors picked off significant share from them, Shopify, social commerce, Amazon, eBay has been able to maintain a revenue base and, and generate earnings, but they haven't grown along with the rest of e-commerce. So, and if you look at how they've done most recently, I mean, they've basically the business is stagnated up into the last few quarters and they're operating expenses are up significantly. So, it's not to say, you know,

they, they, they are 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, you know, Amazon stores, 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, I mean, and I'm not advocating. I mean, this is not something I would not go head to head against Amazon today, but I mean, eBay could have been Amazon. So, when you look out what Amazon has built, I mean, everything from taking inventory and their principles of

“they provide a great customer experience. And so, 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.

So eBay, by doing nothing has basically carved out a niche in certain categories where

Amazon is in strong because they're strong in other categories and, you know, you're buying a phone charger or new products. It's not necessarily the place where you want to search for like a unique baseball card or 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 they ended up basically like defaulting into those categories because

their largest competitor was focused on other things.

“Do you think Amazon's over-earning right now? Because I think the point you make resonates with”

me I've been involved in a number of businesses I've been on the board of and I see the margin that Amazon takes from sellers and 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. So, there's not a lot of other places that offer a competitive alternative to Amazon to those sellers. eBay's got a pretty big audience. I mean, 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 and sellers like it because they move a lot of inventory but they don't like the margins.

“The problem would obviously be inventory, right? I mean, if eBay were to go in that direction”

and you were running eBay, what do you think you do about inventory and logistics? I would not be interested in taking in first-hand inventory. I like the marketplace model and the categories where eBay's doing well or categories where game stop is doing especially well also. But going ahead ahead against Amazon is, it's not the most attractive business. eBay's notorious for having bought and then sold a number of big businesses. They bought PayPal and then later spun it out and

devastated and they bought Skype for 2.6 billion in 2005 and then sold 70% of it for 2 billion in

2009 and then they got lucky with Microsoft overpaying in 2011 and they made another $2 billion on it. Today, they knitted a good profit on the Skype sale. So when you think about the audience that eBay has the user base, there's a lot of andcillary businesses you could get into. When you look at PayPal and you look at Skype, were those strategic errors or were they tactical errors? Meaning they were good strategic moves but they were mismanaged and not well integrated, not well run after the

acquisition. What do you think happened there? Well, if you look today at eBay, I mean, I like focus. So them focusing on core eBay makes sense. I mean, my strategy at chewy wasn't creating all these

other subprans for different geographies. It was always focusing on chewy. The focus is helpful.

I'd say in eBay's case hasn't resulted in significant GMV growth, if at all, or earnings growth. But I do like being focused now. I mean, they've recently made acquisitions which don't make sense, but generally speaking, like I like focusing on a singular brand. And especially with a business that's global, there's a lot of upside and you'd be placed in a ton of categories already. So it's hard to do multiple things exceptionally well. Yeah, the other example, obviously

stub hub, which they bought and then sold to the founder, Eric at Diego go for $4 billion years later. But also didn't 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? Yeah, 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 on a”

whole era, he left. I think what did he leave a couple of years ago, 2015? And it's been about 11 years. I mean, if someone were to ask you, hey, give me your summary of what's happened to eBay in the last 11 years. How would you kind of talk through what's happened in the business?

every important metric is down GMVs, down active users is down by 30 million operating earnings

“is down revenue now is basically essentially break even at up a few points and operating expenses.”

It's up significantly. They're operating expenses now. For a business that has no inventory, they're operating, their revenues are, their operating expenses are over half of their revenues. So that's a business that they're not growing. Everybody else in e-commerce is growing. And they're making less money and they're spending a lot more. And their sellers, frankly, aren't happy. Like it's, 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 is not even providing those tools. I mean, Amazon seller central is is like soup to nuts. You could pretty much do

“everything in seller central. Whereas with eBay, it's a pain. And they alienate their sellers.”

I mean, they had concierge programs for their top sellers. And now it's like they take their sellers for granted and they're taking advantage of them. So the sellers in a market place 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 end up ultimately doing more sales. And they're not working with their sellers to make them happy. So it's not that complicated. You talk to the sellers

on the phone. You talk to the top sellers. You ask them what are the pain points and you get the engineering team on the phone with the sellers and you start basically banging them out. But you know,

“I guess existing management team doesn't roll up their like they're not going to roll up their”

sleeves. They're going to go to outside consulting firms that tell them how to run their business. Is that what's happened? What you state seems obvious. So do you think it's that management simply been complacent and collecting a paycheck and no one's acting like an owner, no one actually notes how to execute or you think they fundamentally would disagree with that strategy,

those points that you're making? Well, I mean, they're never going to admit it. But I would bet everything

that they're working with multiple outside consultants and for a different for a lot of different reasons and they're not making their sellers happy. So their sellers are on the platform because they do a lot of business on the platform and they want to move product. But they don't feel like eBay is wants to make them succeed and is working with them to do more business together. So that's what happens when you go from a business that found or operate or run to business with a professional

management team is you lose the the one on one and just the rolling up your sleeves 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 three, four or five years so that the shareholders that are considering your acquisition offer can see both your vision and your plan for execution on that vision over the next several

years or you much more of a responsive manager where you're going to go in and diagnose and be much more of a tactician in iterating almost an agile way of the business to success. How do you kind of think about presenting how you're going to be more successful in operating this business and existing management? So there are three areas. Number one is on immediately improving earnings through cutting

costs and pulling $2 billion of costs out of the business and on the operating base of close to

five and a half billion of expenses and 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 basically one and then there's two growth factors that I'm very much interested in. Number one is live commerce and there's a large competitor that is

sucks for a lot of different reasons and they don't have the content creators on the platform.

“And nobody even really knows eBay live exists. There's like an application process. I talked”

to sellers and they're telling me they've applied to be a seller and they are waiting to get approved. It's like they're basically stopping themselves from being successful and getting content creators onto the platform and then the entire back end of eBay live also sucks. So live commerce,

the time is like a 400 billion. It's growing very quickly in the US. It's very popular in Asia

and eBay live should be significantly larger. They should be the category leader in the space and they have like at max a few hundred people, you know, basically watching, watching their watching their sales. So that's a huge huge growth opportunity for them to start doing really

“well in live commerce. And the benefit also we have what the stores beyond basically fixing the platform,”

the front end and the back end using the stores and their 1600 essentially nodes that can be used as studios for creators. They could be used as fulfillment and logistics and ultimately allowing sellers and the content creators do what they do best. They just create content and we can help them on photography. We can help them on fulfillment. We can help them on logistics. And we can also do the authentication and that extends to the marketplace model as well. So I would focus a lot

on growing the live commerce side of things beyond the cost cutting. And then the third thing

is, and this is something that I have not spoken about before publicly, but eBay today is the leader in physical items, physical collectibles as an example. And so I would extend that into digital collectibles. And essentially, if you look at all of these in-game items, AAA titles that people are accumulating, skins, weapons, all of these things, taking eBay and building a marketplace where you can provide liquidity for in-game digital items. Essentially, it's what

NFTs could of people thought they were, but ultimately they had no real utility. In-game items actually have real utility. And 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, I mean, it's a piece of cardboard and a piece of plastic. And they're very, very, very popular, but there's no real utility them other than being able to tell people you've got these really

a really unique trading card. But if you look at in-game digital items, there's no marketplace that is providing liquidity for them. And so I would use eBay to provide liquidity for in-game

“digital items. And I believe that addressable market is significantly larger than”

could be much larger than eBay's marketplace on physical items. And no one's doing it. And this should already exist. And it's kind of like 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 that ran chewy for a few years and sold it. And you've been running games.

Stop. You've never really operated a business of the 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. You don't have the skills. You don't have the competency. What's their rationale for rejecting your bid and what's the feedback? The Frank feedback you've heard either behind closed doors or through, you know, third party is about what's going on here. Well, they put out a rejection letter, which said that our offer wasn't credible. And there was a lot of uncertainty. And, you know,

frankly, and by the way, I mean, this is expected. They don't want to hand over the reins. They're making a lot of money. And so I completely understand why they're taking the position that they're taking. But, you know, they spelled it out in the rejection letter. And number one was,

it means that eBay can't get the financing, because we're getting the financing off of eBay's

“balance sheet. But there's been very, you know, there has not been very much engagement from the”

management board level. Frankly, there's been really no engagement. I mean, they're playing games. They pointed us to their high-priced advisors. And then when we reach out the schedule,

a meeting, they don't schedule the meeting. So, so, when you first started having this idea

sitting on the John and you're like, I'm going to move forward with this thing. I'm assuming at some point you called bankers and talked about structure around this to figure out, how do we put this bid together? Where do you go down the path where you said, let's do half cash and then convince them to take our stock and basically roll their stock into our stock and let us run the business versus raise 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, which would make it a lot harder for them to simply reject so easily. Maybe you can walk it through the banker conversations and the process you've gone through and thinking about structure here. Ultimately, the decision is who do you want to run the business? And who do you think is more competent to run the business and who's going to maximize shareholder value? Because by giving existing shareholders, game stocks, shares, game stock, the combined company,

the 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, 50% stock at a premium to where we bought it. And essentially, they get to continue owning eBay except you've got someone that is highly incentivized to maximize shareholder value, knows a thing or two about ecommerce and running the business

“efficiently. But why not go all cash right? Like why not raise the capital?”

If you can raise half the cash, do the bid, why not raise all the cash, sell your shares, sell, sell, game stock shares, two investors to raise the cash that are aligned with you, rather than the investors that own those eBay shares. And then go make them an all cash offer. I mean, that is not what we've presented today. And that's a lot of

cash to come up with. So we don't have $60 billion of cash just lying around.

Right. Well, come me about the owners. Have you spoken to any of the shareholders at eBay and do you have a view on how they're thinking about voting their shares? My understanding is there was recently a rejection on 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 a 20%. So that failure means you cannot call a special shareholder meeting without 20% of the share

it's calling for it. Is that right? Yeah. 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 at 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 mean, I don't want to get into individual shareholder discussions, but the consensus is generally been aligned, which is they love the business and they see a lot of opportunities. So 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. So you know, 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 or someone that's basically selling stock hand over fist. And by the way, has not bought a single share of stock in the open

interesting thing in this and maybe you can help me understand this is that there's no question

what we're doing, what I'm doing is it's big. You know, it's not every single day that something

“like this occurs. But why does everybody want us to fail? Why does everyone want game stop to fail?”

And why is everyone like the media as an example? Why is it that you've got a management team with no skin in the game? They're not builders. They haven't built anything themselves before. They've basically just been employees at major companies have been overpaid. I think they've ever broken out a sweat in their entire lives. Why is everyone want them to succeed? But when you have someone that, and by the way, this is going to be coming out. It hasn't been files yet. Maybe

by the time that, you know, when this error is it will be. But I'm putting 500 million of my own money

into this transaction. I've been pulled a penny out of a game stop. I've invested a lot of money into a game stop. I've been doing it for a long time. Game stops have much stronger business today. Everyone hates game stop. And it seems like everyone in the media basically wants us to fail. And once them to succeed. And you've got a board that's making hundreds of thousands of dollars a year. And 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 with taking zero risk. And why is everyone basically want this entrenched? Management team and board to stay like protected and to continue running the business and doesn't want. There's nothing more

“American than basically 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. If you won't take the meeting, I would fly to California tomorrow. No. I mean, you're the guy that's going to fire him. He's going to get a payday, right? A big payday. A big payday. What's his payday? Do you know what the payday is for him?

It's over 100 million bucks. 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. You reached out? Yeah. The great thing about markets, they don't care what the media says. On the short term they might. It's a voting machine, but on the long term it's a weighing machine. And if the performance continues to be delivered a game stop, people that might want to see the company fail are going to lose because you're going to get the way, 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 game stop, folks have to start paying attention that this isn't just a mean stock. I do think that the media in order to give you credibility. And this would be my take on this. They're going to have to acknowledge that all of their takes on game stop just being a mean stock were wrong. And that there is actually a business here and that there is value being created here

and that they missed that and they got the story completely wrong. And so to recognize that and to recognize your competency as an executive and as a CEO and as someone that 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 trade saying, hey, this is all just fake and 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 people were wrong about game stop 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. Yeah. 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's no other bidders,”

they're just negotiating against themselves. Is that fair to say? Are there other bidders that could emerge here that could beat this price that you're offering? That could beat this offer that

of the bolder and it makes sense for me to pay this for the business because of what I could do

“with the business. Not just short term in terms of increasing the earnings, but long term in terms”

of really taking significant market share in live commerce and building a digital marketplace

for gaming. That's something and 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, you know, obviously,

“when it comes to their large competitors, there's anti-trust issues in terms of them being able to”

do a deal of the 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. But 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. So, I mean, this is what often happens in these sorts of situations. Historically,”

is the shareholder base can turn over. And 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? And so that might happen here as well. So there's 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

along? Yeah. We're working with bankers and high priced advisors. Right. 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. [BLANK_AUDIO]