eBay has stagnated — they gave up massive market share to competitors and haven't grown along with the rest of e-commerce, despite having a foundational moat from first-mover advantage.

(00:00:00) Everyone hates GameStop, and it seems like everyone in the media basically wants us to fail and wants them to succeed. (00:00:06) And you've got a board that's making hundreds of thousands of dollars a year. (00:00:10) They don't buy stock with their own money. (00:00:13) They end up showing up to a handful of board meetings, and they're making a fortune. (00:00:18) You've got a management team that is grossly overpaid. (00:00:22) There's nothing more American than basically risking your own capital. (00:00:26) So why does everyone want us to fail? (00:00:31) AppLovin' started with an $8 domain and no VC funding. (00:00:34) They built anyway and became one of the largest ad platforms in the world. (00:00:38) Now they're bringing that same engine to e-commerce through AppLovin' Ads. (00:00:41) Your ads run inside mobile games, reaching over a billion people with full-screen, distraction-free attention. (00:00:47) The platform finds buyers and optimizes for profit. (00:00:50) You set the target, it does the rest. (00:00:52) A cookware brand doing $4 million tried AppLovin' Ads, hit 16 million, turned profitable, and they're on pace for $80 million. (00:00:58) million this year. (00:00:59) Visit applovin.com/allin to launch your first campaign today. (00:01:07) Ryan Cohen, welcome to the All In interview. (00:01:09) Thanks for being here. (00:01:10) Thank you for having me. (00:01:12) 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. (00:01:20) This was before several chapters of your life unfolded. (00:01:25) And it's great to be talking with you today. (00:01:27) 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. (00:01:38) But I want to talk a little bit about your story first, if that's okay. (00:01:41) 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. (00:01:49) Maybe we can go back to the business you started, Chewy, if that's okay. (00:01:55) Yes, definitely. (00:01:56) Yeah. (00:01:57) Well, maybe tell me why you started Chewy. (00:01:58) How'd you get that idea and how'd you get into building this business from where you were coming from at that time? (00:02:05) We were, wanted to build something online and we were about to launch an online jewelry website. (00:02:17) Did not know anything about jewelry, went to a bunch of trade shows, bought hundreds of thousands of dollars worth of inventory. (00:02:25) Built the website, had the distribution, and then I was shopping in a neighborhood pet store. (00:02:32) I had a poodle and I was going every few weeks. (00:02:36) And it just hit me on one of my trips that I understood the product much better. (00:02:44) It was a recurring revenue purchase. (00:02:47) the market was still fragmented. (00:02:49) 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. (00:02:56) And 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. (00:03:07) So (00:03:08) 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. (00:03:16) And I looked at Amazon's best practices when it came to supply chain. (00:03:23) 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 (00:03:35) It was easy to be passionate about the category because I'm a pet owner and everyone we hired were pet owners. (00:03:41) And it was all about market leadership as a low margin business. (00:03:46) 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. (00:03:58) and we had negative working capital. (00:04:00) And so it was a business that was able to get billions of dollars in revenue and not consume a lot of capital. (00:04:08) How did you learn to execute wealth? (00:04:11) So at the time, you had little business experience prior to that. (00:04:15) How did you learn those skills? (00:04:17) What were the principles and the values that made you excellent at operating that business? (00:04:22) I understood from the beginning that (00:04:27) The real competition was always Amazon and they were world class when it comes to supply chain. (00:04:34) So negotiating. (00:04:38) very fiercely with suppliers to get the best product costs. (00:04:42) And that meant getting to scale and going from buying pallets of dog food to truckloads of dog food and moving from distribution to direct and buying generally, the more you buy, the lower the prices are going to be. (00:04:59) Operating efficiently in the warehouses. (00:05:02) And so labor optimization, warehouse management optimization, (00:05:08) getting competitive prices with shipping carriers. (00:05:12) It was a game of pennies and we were, the goal was to grow quickly and establish market leadership. (00:05:19) And the difference between failure and success was, pennies in the red is failure and pennies in the black is success. (00:05:27) So we had to operate hyper efficiently and (00:05:33) There was a lot of competition in the space. (00:05:35) It wasn't a novel idea. (00:05:36) It was going head to head against Amazon and pets.com was in the backdrop. (00:05:42) So it made it very difficult to raise capital, but I'd say at a high level, the market underestimated. (00:05:50) not the size of the addressable market, but our execution. (00:05:55) as a customer, I've had lots of dogs. (00:05:57) It was always such a great consumer experience. (00:06:00) 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 cash flows to work right? (00:06:12) Was there a lot on the consumer product angle that you spent time on with that business? (00:06:16) When we looked at the cohorts, (00:06:20) you could see the customers were very sticky. (00:06:22) And I looked at it, the reason why I moved from jewelry to pet food was because it was a recurring item. (00:06:31) So I love the fact that it was consumable. (00:06:34) 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. (00:06:44) So (00:06:47) The vision and the idea was if we treat our customers well, they're going to continue shopping with us. (00:06:53) And that's what we did. (00:06:54) And so it was everything from the handwritten holiday cards to the pet portraits to 24-7 customer service. (00:07:01) And if there was ever an issue, we took care of the customer. (00:07:07) And that's what happened. (00:07:10) And the customers continued (00:07:12) shopping with us. (00:07:13) And the best referrals are word of mouth. (00:07:16) And pet owners love to tell their friends and fellow pet owners if they have a great experience. (00:07:26) So the thesis ultimately played out. (00:07:29) So for those who don't know, you built and sold the business in 2017 for $3.35 billion. (00:07:36) Subsequently, there was an IPO, and that business continued to trade up in value. (00:07:40) So you clearly executed well. (00:07:42) 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? (00:07:51) What did you learn as a manager, as a CEO, as an operator when you were building Chewy? (00:07:57) Staying on top of everything. (00:07:59) Just it's 24-7, watching all of the numbers. (00:08:04) I mean, I would (00:08:06) stay in Google AdWords till four or five in the morning, managing campaigns myself. (00:08:14) I was negotiating directly with all of our major suppliers. (00:08:18) I had a supplier that told me during one of our negotiations actually said, (00:08:23) it was like a one year contract. (00:08:26) And he's like, I'm so happy this is over. (00:08:28) I never have to talk to you for, well, it was basically another year. (00:08:32) He's like, I don't have to speak to you for next year. (00:08:34) It's like, that was a compliment. (00:08:36) I would. (00:08:37) And anytime someone else was doing the negotiation, I mean, it's counterintuitive. (00:08:41) They want to build relationships with suppliers. (00:08:44) The reality is, (00:08:47) It's mostly transactional. (00:08:48) And so if our suppliers are sending us gifts in the mail, that's a really bad sign. (00:08:52) It means we're overpaying. (00:08:53) If our suppliers are telling us they never want to speak to us again, it means we're getting the right price. (00:08:58) But getting people into that framework is not easy because the (00:09:04) The path of least resistance is basically to get along and to be nice. (00:09:10) But unfortunately, when you're building a business and you're losing money, you've got to focus on sustainability. (00:09:19) So just being on top of everything. (00:09:24) And what about on people? (00:09:25) I'm just 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. (00:09:34) And I'm trying to understand how do you find great people and how do you hold people accountable and what are management techniques that you've developed for building a team and running a team? (00:09:46) I look for will over skill and (00:09:52) 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. (00:10:06) And she applied for the job many times and we just, we didn't think she was qualified. (00:10:11) And we looked over her resume and she kept on applying. (00:10:15) She was relentless. (00:10:18) So on paper, she didn't necessarily have the right experience, but she had drive. (00:10:24) She was motivated. (00:10:25) She wanted to work. (00:10:27) And she ended up being incredible. (00:10:30) So I mean, it was in general, it was finding people that are diehards that are just willing to put everything in, go all in, no pun intended. (00:10:42) and basically be as psychotic as me. (00:10:45) And that was the team that we put together. (00:10:47) It was just a bunch of fellow psychopaths. (00:10:50) And psychopaths attract psychopaths and the engine is running at that point. (00:10:54) Exactly. (00:10:55) Yeah. (00:10:56) A's only put up with A's. (00:10:58) Exactly. (00:11:00) Yeah. (00:11:00) And do you regret selling Chewy when you did? (00:11:03) Because I mean, it went public at what, 20 billion market cap like 2 years later. (00:11:07) I mean, as soon as I sold it, it just took off. (00:11:10) It's like, were you a liability? (00:11:12) No, I'm like, what happened? (00:11:14) Well, I mean, you know, typical if you talk to the investment bankers there, we're like, you know, we're getting an amazing price and then all of a sudden it goes public and there's basically a lot more than what anyone had guessed. (00:11:28) So nobody has a crystal ball. (00:11:32) Chewy was my baby. (00:11:34) I put a lot of, I love that business. (00:11:38) And so, and everything, works out for a reason in life, one way or another. (00:11:46) Yeah. (00:11:46) And we wouldn't be having this conversation if I was still running Chewy. (00:11:49) So, or at least maybe we would, but it would be about dog food. (00:11:52) It might be something like that. (00:11:58) So after you sold it, you kind of became a pretty active investor. (00:12:03) Is that a fair statement about the next chapter for you? (00:12:06) I went activist for the first time. (00:12:08) Yeah, that's an accurate statement. (00:12:12) Well, you were like a pretty active, like just general, like you would buy and hold concentrated positions in stocks. (00:12:19) Is that fair at that stage? (00:12:22) How did you pick companies? (00:12:23) So what do you look for and how'd you make the investments you made? (00:12:25) Maybe you can walk us through a couple of the stories of what you went through at that stage. (00:12:32) 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 (00:12:49) passive or activist kind of investments. (00:12:52) And so that's been my general framework. (00:12:58) Why did you choose to go activist when you kind of started making these? (00:13:01) Were you getting frustrated in conversations with management, decided to take it public? (00:13:05) Or was there a model that you were kind of going after where you saw others have success with publicly calling out issues in businesses and driving change? (00:13:16) Well, when it came to GameStop, (00:13:18) originally it was a passive investment and I owned under 5% and the CEO actually reached out to me because they were fighting an activist and they wanted me to join the board. (00:13:35) They thought I was basically going to be their friend. (00:13:36) 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. (00:13:47) And so they kind of put the idea in my head. (00:13:51) This is around 2020, right? (00:13:53) It was, yes, exactly. (00:13:58) So I wasn't 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. (00:14:16) And then (00:14:18) COVID things got a lot worse. (00:14:20) They were deemed a non-essential store. (00:14:22) Basically like kind of on the verge of bankruptcy, the stock traded down significantly. (00:14:29) And then I continued accumulating. (00:14:32) I ended up going above 5%. (00:14:34) At that point, I needed to decide, am I going to file a G or a D? (00:14:39) A 13G is basically if you want to be passive, which means you're not going to engage with the management team at all. (00:14:45) And A D, (00:14:47) is where you are going to engage with them. (00:14:49) So that was an easy decision once I crossed over 5%. (00:14:53) And I remember actually getting a call from the CEO GameStop at the time. (00:14:57) And he's like, we were discussing me going above 5% and filing required SEC forms. (00:15:04) And he's like, did you file a D or G? (00:15:07) I'm like, a D. (00:15:08) And a D obviously is, you know, it's intended that you're going to be activist. (00:15:15) Even though it doesn't necessarily mean you need to be hostile, it just means you're going to engage with the management team. (00:15:21) So anyway, basically that was what happened. (00:15:27) But going back to GameStop, how did you first identify GameStop? (00:15:30) 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 meme stock. (00:15:40) Was there fundamental unrealized value you saw? (00:15:42) Because you seem to be (00:15:45) a real kind of unrealized value investor is how I would kind of describe, tell me if you disagree, that there's real value in an organization that's not being realized, its potential. (00:15:55) What did you see in GameStop? (00:15:56) How did you first identify it and get involved and start accumulating? (00:16:02) I found it fascinating that everybody was like, for whatever reason, and still to this day, everybody hates like the (00:16:14) The mainstream media, the general consensus has been that GameStop is going to be, was going out of business like a long time ago, right? (00:16:24) Like 15 years ago. (00:16:25) This thing was basically shorted to oblivion and everyone was betting against it. (00:16:31) And everyone's basically just hated it. (00:16:33) It's one of those things where when you even say GameStop, everyone's like, really? (00:16:38) You're an investor in GameStop? (00:16:40) 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 bet against it. (00:16:50) And so I like that. (00:16:53) Like I like the idea of going into a situation where you're basically running into (00:16:59) you're running into a burning house. (00:17:01) 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. (00:17:11) And then I ended up basically, not necessarily intentionally, (00:17:20) joining the board and then ultimately being the CEO. (00:17:24) But that wasn't the original plan. (00:17:26) The original plan was basically to be a passive investor. (00:17:29) And then I basically ended up just, it's like there was no one else to do the job. (00:17:33) So someone needs to do it. (00:17:35) And here we are today. (00:17:38) Was there a thesis on value realization or was it just about the market had the value wrong? (00:17:43) Did you think at the time there was operational changes that could drive more value? (00:17:47) Or was it just like, hey, everyone's got this shorted, everyone's got this to the wrong side? (00:17:52) The original thesis was that there's an upcoming console cycle and that they're probably going to survive until the upcoming console cycle. (00:18:02) And the new PlayStation and Microsoft Xbox comes out. (00:18:06) And it was a very cyclical business. (00:18:10) And GameStop typically does very well in the beginning of the console cycle. (00:18:14) when the market is very, very tight and people are basically running a GameStop to buy hardware and software. (00:18:22) And so that was the original thesis. (00:18:24) And then as I got pulled in, obviously the business is completely different and the thesis has changed. (00:18:32) But that's where I started as a passive investor. (00:18:36) So then they ask you to join the board, but (00:18:40) you make the point, hey, if I'm going to be involved, I need to have more board seats. (00:18:43) Is that kind of how the evolution? (00:18:45) Yeah, they thought it was basically just going to join the board and be a patsy. (00:18:49) Right. (00:18:51) And then you said, I was like, you probably picked the wrong guy. (00:18:54) I think that was going to be the case. (00:18:57) So then you went public with your fears. (00:18:58) Is that right? (00:19:00) And you kind of, so I think it was 2021, like early 2021, you joined the board. (00:19:08) with two other executives from Chewy, two friends of yours or two colleagues of yours. (00:19:12) Is that right? (00:19:13) Exactly. (00:19:13) And then the stock took off and all of the hedge funds that were short had to cover and the stock price just ripped. (00:19:19) Exactly. (00:19:19) And this is the whole story. (00:19:21) So then in 2021, the company raises billion 7, wipes out all the debt. (00:19:28) And what was the plan at that point in the business cycle? (00:19:31) Was there an investment operating plan that you were trying to get the team to execute against? (00:19:37) The original plan, I learned a lot at GameStop. (00:19:45) I basically took, I went in and I had this bias from Chewy, which is basically like everything that I learned at Chewy, I was going to apply to GameStop. (00:19:57) And it took me about... (00:20:02) I don't know, maybe just over a year to realize that was really, really stupid. (00:20:08) But I ended up hiring a bunch of e-commerce people from Chewy and Amazon. (00:20:14) And I wasn't the CEO. (00:20:16) I hired a CEO. (00:20:17) So, you know, I didn't have day-to-day visibility on what was going on. (00:20:23) But the strategy was to make GameStop more like Chewy. (00:20:28) And that was the wrong strategy. (00:20:30) 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. (00:20:44) And then it was (00:20:46) went into maniacal cost-cutting mode, efficiency, basically focusing on what GameStop is really good at, which is the pre-owned side of things, and focused on running the retail business very, very well. (00:21:05) And then ultimately that led us to the category of collectibles, which today the business is a leader in the collectibles category and (00:21:15) software makes up a very small percent of the business. (00:21:17) But there were a lot of learnings on the way. (00:21:20) And you look at basically Chewy and GameStop, you say, well, they're both retailers, you take the same playbook. (00:21:26) But that was not the case. (00:21:29) Totally different animal. (00:21:32) And one is you've got repeat purchases and you've got these really sticky cohorts. (00:21:38) And we can never overbuy inventory, for instance, at Chewy because (00:21:44) we would end up ultimately selling it. (00:21:46) The revenues were growing and we turned the inventory very quickly, whereas we ended up buying all kinds of inventory at GameStop and ended up having a bunch of TVs and... (00:22:00) inventory that ends up getting stuck in the stores. (00:22:02) And if you don't sell it, you end up basically taking down, losing a lot of money and marking it down. (00:22:08) So a lot of learnings along the way for me to understand physical retail, which when I joined the board, when I became CEO, I had zero physical retail experience. (00:22:22) Did you think a lot about here are the different categories we could leverage this GameStop network, the stores, the consumer into besides collectibles? (00:22:34) 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? (00:22:43) We were already in the category. (00:22:45) We weren't deep in the category. (00:22:47) And we did try a few different other things within consumer electronics that just really didn't end up taking off like collectibles did. (00:22:56) And if you look at TCG in particular, but now we're growing in sports as well, has been very, very, very popular. (00:23:08) So we tried a few different things and (00:23:12) The trade-in model, especially, worked really well, where, today, you could basically bring in a, not basically, you can bring in a graded P.S.A. (00:23:24) card 8 and above, and we will give you cash on the spot. (00:23:28) We buy back the card and then we either sell it in the store or we bring it back to our warehouses and we sell it online. (00:23:36) So that was very similar to the trade-in model that we had on both hardware and software. (00:23:44) And it was very extendable to the trading cards category as well. (00:23:49) As you made this change, did you have to change the team a lot, management team? (00:23:53) I mean, what was the turnover like after you became CEO at the leadership level and then below the leadership level? (00:23:59) It was identifying the talents at the company and basically having them working directly with them. (00:24:08) Like the people who know GameStop the best have been the people that have been there for a long time. (00:24:15) And me working closely with them, (00:24:19) ended up working really well. (00:24:21) You brought in others, obviously, as well, to complement them. (00:24:25) Yeah, some, but I mean, generally, working with the people that have been there that know the business really well. (00:24:34) Yeah. (00:24:35) Some folks who have managed multiple businesses or been CEO and applied their skills to different business lines, (00:24:44) I interviewed this guy, Charles Koch, a few weeks ago from Koch Industries. (00:24:48) He's got a whole set of principles that he tries to apply to running a business. (00:24:53) And those principles he's used to build and acquire and operate multiple different kinds of businesses. (00:24:59) And he transforms the business by applying its principles to how he runs them. (00:25:03) 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? (00:25:12) that you then bring to bear on GameStop, on Chewy, and maybe Next on eBay that you've used repeatedly that works well for you? (00:25:20) Or is everything kind of truly Zen mind, beginner's mind, first principles approach to thinking about the business? (00:25:27) I'm sure I do, but I'm not good at articulating it. (00:25:34) So I don't know if I'm the right person to be able to say what's going through my brain. (00:25:42) Sometimes like whatever I'm feeling, I can't even necessarily describe it. (00:25:47) And if I describe it, ends up being wrong. (00:25:49) So someone else could probably do a better job of answering that question than me. (00:25:55) What do you think someone else that's worked for you repeatedly would say it's like to work with you? (00:25:59) You'd have to, you'd have to ask them. (00:26:03) Okay. (00:26:04) So let's go not good things. (00:26:07) Hopefully not good things. (00:26:08) Yeah, the pressure is on. (00:26:09) I'm going all in. (00:26:15) As the global economy becomes more connected, trust becomes the most valuable asset in the system. (00:26:20) NASDAQ analyzes 1.8 billion transactions every week, and when a fraud pattern surfaces at one institution, AI strengthens detection across the entire network within hours. (00:26:30) That is what it looks like when trust is built into the infrastructure itself. (00:26:33) Built for the economy that is arriving. (00:26:35) Find out more at nasdaq.com. (00:26:40) The numbers speak for themselves in terms of what you've delivered at GameStop. (00:26:45) I think collectibles is now 42% of revenue, $350 million. (00:26:51) In Q1, revenue was $835 million. (00:26:54) You grew at 14% year over year. (00:26:56) You cut SG&A from 228 to 202. (00:26:59) You have 9.7 billion in cash. (00:27:02) 333 million in free cash flow and the board's just authorized to share repurchase. (00:27:08) So it's pretty tremendous how you've operated this business. (00:27:12) 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? (00:27:27) If you look at the size of the business that I can build, (00:27:31) organically with GameStop. (00:27:35) It's nice, it's okay, but I like to do big things. (00:27:41) And Chewy is a good example. (00:27:44) It could have been a $500 million business. (00:27:46) It could have been a $100 million business. (00:27:48) It could have been profitable if we would have spent a lot less money on marketing. (00:27:52) But life is too short to do it small. (00:27:56) So we have (00:28:03) If you look at how complementary, and as we've gone into the collectible space, I've come to appreciate eBay differently. (00:28:21) And if you look at how complementary these two businesses are in, from a lot of different dimensions, (00:28:27) 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. (00:28:50) There's so many aspects of the business that are similar, except that eBay is global and has significant scale. (00:29:02) And frankly, it's a business that I understand a lot better than physical retail. (00:29:10) because I know a thing or two about e-commerce, and it's an area where, frankly, I'm much more comfortable operating. (00:29:16) And so 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, it's all I can't stop thinking about it. (00:29:36) So (00:29:39) 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, it was a low margin business going head to head against Amazon. (00:29:57) And it's similar to like the (00:30:00) the airline industry where people don't really care about the actual airline they're flying. (00:30:04) They're just basically shopping by price. (00:30:06) So that was selling pet food online. (00:30:11) Not a great idea. (00:30:12) And, you know, GameStop, I don't think was such a good idea either. (00:30:16) This is actually a really good idea, whether it ends up working out or not, but this is actually a really good idea. (00:30:23) We'll see what happens. (00:30:24) Was there a moment you remember when you said, (00:30:29) we should make a play for eBay. (00:30:32) Do you remember that moment when you were kind of looking at the business or thinking about the business when this idea kind of sprung forth? (00:30:40) Yes, I do. (00:30:43) What was it? (00:30:44) I was on the toilet. (00:30:49) Okay. (00:30:51) And you were just thinking about it? (00:30:53) Pretty much. (00:30:55) 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. (00:31:03) Yeah, I mean, I've followed eBay for a very long time and I came to appreciate their experience, their moat in the collectible space. (00:31:18) But it's not just collectibles too. (00:31:20) I mean, it's the refurbished tech piece of the business where... (00:31:23) Yeah. (00:31:24) GameStop, it's a big portion of our business, and it's a big portion of eBay's business too, and the second-hand business as well. (00:31:32) So 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. (00:31:50) So if you (00:31:53) have studied eBay. (00:31:55) What do you think the team did right in the early days? (00:31:59) Was it simply the network effect and the business took off? (00:32:02) And once they had the network, it was hard to break the moat? (00:32:05) Was there anything about the formula or the consumer model or experience? (00:32:10) Because you've said publicly, hey, eBay looks a lot like it did in the early days. (00:32:14) Was there something about early management, early design principles, early engineering, anything that happened? (00:32:19) in the early stages of eBay that made it what it is today? (00:32:23) I look at basically the marketplace model where they had first mover advantage. (00:32:28) So their ability to have first mover advantage and really be the like de facto marketplace online, including against Amazon, was significant. (00:32:43) So that was really helpful. (00:32:45) 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 and at scale. (00:33:08) I mean, obviously you can't compare the two. (00:33:13) But their focus on building a marketplace gave them a moat and staying power. (00:33:22) But I wouldn't say that their execution was great. (00:33:26) In the early days, it was great when it was founder operated. (00:33:32) But since then, if you look at how much e-commerce has grown and how much market share they've given up to the likes of basically everyone, new competitors in the space, (00:33:43) that are very category-focused. (00:33:47) Live shopping competitors picked off significant share from them. (00:33:52) Shopify, social commerce, Amazon. (00:33:56) eBay's been able to maintain a revenue base and generate earnings. (00:34:03) but they haven't grown along with the rest of e-commerce. (00:34:07) So, and if you look at how they've done most recently, I mean, they've basically, the business has stagnated up until the last few quarters and their operating expenses are up significantly. (00:34:17) So, it's not to say, you know, they've, they, are the de facto marketplace online, especially in certain categories, but that business should be significantly larger. (00:34:32) Do you think they missed the boat? (00:34:34) And if so, why on stores? (00:34:37) Amazon stores, Shopify obviously have become categories unto themselves. (00:34:43) All of those power sellers probably transitioned over to having stores at some point. (00:34:48) What did eBay miss? (00:34:50) Was it purely execution? (00:34:51) And is there still an opportunity to win back that market? (00:34:54) 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. (00:35:04) So when you look at what Amazon has built, I mean, everything from taking inventory and their principles of (00:35:14) They provide a great customer experience. (00:35:16) And so that's why we all love shopping on Amazon. (00:35:20) And as a seller, Seller Central is a very powerful platform and sellers generally like it too. (00:35:27) I don't know if they necessarily like the margins, but they can move a lot of inventory on Amazon. (00:35:34) So eBay, (00:35:38) by doing nothing, has basically carved out a niche in certain categories where Amazon isn't strong because they're strong in other categories. (00:35:50) And you know, you're buying a phone charger or new products. (00:35:54) It's not necessarily the place where you want to search for like a (00:36:00) a unique baseball card or a hard to find pen or a used auto part. (00:36:09) 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. (00:36:25) Do you think Amazon's over-earning right now? (00:36:28) Because I think the point you make resonates with me. (00:36:30) 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. (00:36:39) almost feels to me like everyone's hungry for an alternative. (00:36:42) But the reason you stay on Amazon is the reach and the audience that you get with Amazon. (00:36:46) So there's not a lot of other places that offer a competitive alternative to Amazon to those sellers. (00:36:53) eBay's got a pretty big audience. (00:36:55) I mean, do you think that Amazon's over-earning in that sense? (00:36:59) And is there an opportunity for eBay to step up and compete in that sense? (00:37:04) They charge a lot of money to their sellers. (00:37:06) I agree with you. (00:37:08) And sellers like it because they move a lot of inventory, but they don't like the margins. (00:37:14) The problem would obviously be inventory, right? (00:37:16) 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? (00:37:21) I would not be interested in taking in first-hand inventory. (00:37:26) I like the marketplace model and the categories where eBay is doing well are categories where GameStop is doing especially well also. (00:37:40) But (00:37:41) Going head-to-head against Amazon is, it's not the most attractive business. (00:37:53) eBay is notorious for having bought and then sold a number of big businesses. (00:37:57) They bought PayPal and then later spun it out and divested, and they bought Skype for 2.6 billion in 2005. (00:38:04) and then sold 70% of it for 2 billion in 2009. (00:38:07) And then they got lucky with Microsoft overpaying in 2011, and they made another 2 billion on it. (00:38:12) So they netted a good profit on the Skype sale. (00:38:16) So when you think about the audience that eBay has, the user base, there's a lot of ancillary businesses you could get into. (00:38:22) When you look at PayPal, when you look at Skype, were those strategic errors? (00:38:27) 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? (00:38:34) What do you think happened there? (00:38:36) Well, if you look today at eBay, I mean, I like focus. (00:38:43) So them focusing on core eBay makes sense. (00:38:48) I mean, my strategy at Chewy wasn't creating all these other sub-brands for different geographies. (00:38:54) It was always focusing on Chewy. (00:38:58) So the focus is helpful. (00:39:04) I'd say in eBay's case hasn't resulted in significant GMV growth, if at all, or earnings growth. (00:39:12) But I do like being focused now. (00:39:15) I mean, they've recently made acquisitions, which (00:39:19) don't make sense. (00:39:20) But generally speaking, I like focusing on a singular brand. (00:39:26) And especially with a business that's global, there's a lot of upside. (00:39:31) And eBay plays in a ton of categories already. (00:39:33) So it's hard to do multiple things exceptionally well. (00:39:38) Yeah, the other example, obviously, StubHub, which they bought and then sold to the founder, Eric, at Viagogo. (00:39:44) for 4 billion years later, but also didn't really transition well. (00:39:48) 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? (00:39:58) Yeah, building it.