All right, Ryan. I thought a great place to start the conversation. Can you explain to me very simply, what is GameStop's business today? Everyone saw the meme stock craze, but you've actually turned this thing around financially. So, what exactly is the business today?
The business is 1,600 US stores. We've divested a lot of parts of the international money-losing businesses. It's a business that's a lot less reliant on hardware and software. And we've leaned very heavily into collectibles, trading cards, and refurbished tech.
And then, what is the latest financial metrics compared to when you first got involved? Because my understanding is the business was losing tons of money, now not so much.
Yeah, when I joined the board, the company was losing hundreds of millions of dollars every single quarter. And the business today is profitable and is making a lot of money and is going to make a lot of money this year. And we've cut SG&A by 800 million. And you know, we made close to 400 million dollars last year. And this year, we'll do better than that.
Okay. So, what people thought, I think, when you first stepped in was like you're going to be the meme stock king, but really it seems like you're now the turnaround king. You basically turned the business around.
Okay. What's the balance sheet look like? Because you got a lot of assets. How the heck did you get billions of dollars on your balance sheet?
We have approximately around 9 billion dollars of cash. We did some convertible debt at a 0% coupon. And the company has a strong balance sheet today.
Okay. Of that 9 billion, you've got cash and then you've got Bitcoin still?
All right. When you bought the Bitcoin, I think everyone was all excited because you're going to go and like put all the money in Bitcoin, but it seems like you bought a little bit and you're just kind of hanging there. You recently announced, okay, now you want to go buy eBay. And I got to admit, when I first saw the very first Wall Street Journal article that said that you were looking for a big target, usually a big target is like peer-sized. You know, if you're a $10 billion company, you're looking for a 10 billion, maybe a 20 billion. eBay's a 50-plus billion-dollar company. So, this is like the ultimate elephant hunting. Why eBay? Like, why is that so interesting to you?
It's within my circle of competence. It's a business that I understand. It's the second largest e-commerce asset in the United States. And it's a business that is under-earning, and it's a business, frankly, where I can go in and I can make a really big impact in terms of the profitability in the short term, but more important in the long term, it's something where I want to run eBay. I want to own eBay. I want eBay to me to be a much, much larger business. And it's a business I understand well based on my Chewy experience. Like, physical retail is not within my circle of competence. E-commerce is my wheelhouse, and there's no asset in my view that has as much potential as eBay.
So, there's a woman that I know who is a very well-known business journalist, and she texted me when all this went on. And she basically was like, "What are your thoughts?" So, I got on the phone with her, and one of my points to her, which I am shocked people do not quite understand, is like, you've done this before. You built a Chewy's, a $10 billion company today, give or take. Can you just give us like the 2 minutes on like, what was Chewy, how you built it? Like, you're not somebody who's just, you know, came out of nowhere, somehow became the CEO of GameStop, and you're like trying to like throw spaghetti at the wall. Like, you came from the e-commerce business and built a very, very successful e-commerce business.
Yeah. Chewy I started in 2011. I had a lot of trouble raising capital for a lot of different reasons. There was a lot of competitors in the space. There was the comparison to pets.com. Everyone said it was impossible to have positive unit economics selling 30-lb bags of dog food or pet food and cat litter. But we scaled very quickly. It was all about scale and market leadership and focusing on the basic stuff. The fast shipping, having amazing customer service, having the right products, having a UI and UX that was very simple to go onto the website, check out very quickly. So, in hindsight, it wasn't the best idea. It's a low-margin business, but it's consumables and customers. It's a subscription business. Over 90% of the company's revenues come from auto ship. But, we had really good execution. So, we focused on doing the simple things really well and building a household name.
Now, when I look at you taking that experience and going to eBay, I think there's two things that stand out to me. One, people are positioning this as GameStop buying eBay, but really it's merging of them creating one single business made up of eBay and GameStop and putting you in as the CEO. So, to some degree this deal is people betting on you leading the business going forward versus the existing management team. And then the second thing is that everyone looks at GameStop and immediately it is the retail investor participation that everyone focuses on. eBay, from my understanding, is almost all institutional investors. Very large portion is institutional investors. So, really the pitch here is like you are pitching Ryan as CEO of the combined company to institutional investors, not to retail investors. Is that a fair way to think about this?
All right, what's your pitch to the institutions? Like, why should they support this?
If I was the institutions, I would roll over 100% of my equity and I'm not saying that I don't say that as we're offering to buy eBay at $125 a share. You can look at it as basically we're giving them a special dividend for half. And you know, depending on when they bought, there's taxes with that and then the other half they're rolling into equity of the combined business that is going to be a lot more profitable because we're going to focus on efficiency in the short term and in the long term and we're going to focus on revenue growth and I don't get paid unless I build a much larger business and I want to turn eBay into something much larger. So, it's the difference between a professional management team and board of directors versus an owner-operator leading it who doesn't believe at all in work-life balance.
Now, you mentioned you wanted to rival Amazon. You think you can do that?
I say that in terms of not turning eBay into Amazon, not going head-to-head in fast-moving consumables or selling new electronics or phone chargers or anything like that. I say that in terms of eBay's a $50 billion business and it's under-earning. And I think that us leaning into live commerce with category expansion, you know, eBay is a household name. It is a very, very strong asset and it can be a much more valuable business. So, I say that in terms of just the sheer scale of the business. It can be something much larger than what it is today.
So, if I look, the share price is up 13% in the last month, which given about 50 billion or so, you've created, you know, 6, 7 billion dollars of value for eBay shareholders by simply just making this announcement. Is that the way you look at it?
Yeah, I mean, there you know, part of it, I think that's fair, you know, the yeah. That makes sense.
Okay. Now, you've been tweeting a lot. How much time do you spend on Twitter?
How much time do I spend on Twitter?
On a daily basis? Yeah, I would say probably somewhere between 30 to 60 minutes daily.
Okay. Some of these tweets are entertaining. It's very entertaining. So, I like the fact that anyone can say anything, good or bad, and you know, nothing gets taken down anymore. So, it's good.
Listen, you're talking to somebody who spends a lot more than 60 minutes on Twitter every day. So, I agree with you. Some of the things that you've been tweeting are directly calling out both the management team and the board. And I think a lot of your commentary has basically been like these people are just nurturing the business. They're not really growing it. They're not, you know, kind of leaning into innovation and driving what you think should be happening at the company. But, then also you've been hammering them on board compensation, CEO compensation, management compensation. Just talk through like what are some of the absurd stories or insights and anecdotes that you've come across so far?
Well, I mean, if you look at, they rejected our proposal this morning. And I mean, the general spirit was actually correct. They said that it wasn't attractive. And they're right. It's not attractive to the board and the management team because we would be getting rid of the board and the management team. And the board collected 4 million in board fees last year. The CEO's making close to 30 million annually. The CEO, by the way, has bought $0 of stock in the open market since he's been CEO for close to 6 years. So, it's not attractive to them. It's very attractive to shareholders. But, it's not attractive to them and they're, you know, it's anticipated their reaction in terms of, you know, they're not owners. They're employees collecting a paycheck.
So, their exact words I think were your offer was not credible or attractive. Is this it? Is it over? Like, do you just go home now? Or what do you do?
No, well, we'll see what happens in terms of next steps, but...
I want the business. I want the business and, you know, we own indirectly through our positions since it's a derivative position. We own over 5% and I want to own the business. I want to run the business.
So, how do you get around them tonight? Because it's very weird, right? Like, for those that don't understand how this works, it's like you're basically bidding for a company and the people who are the first line of defense of making the yes decision, you're basically saying, "If I get this business, you will not have a job here." So, of course they're not very interested in saying yes. There are other avenues you could pursue. For example, you could proxy shareholders and you can kind of go around. You could go to institutional investors. Like, what is the Ryan master plan as to how you end up getting eBay?
Yeah, at a high level, it is the owners of the business understanding that there's a lot more shareholder value to be created by me running the business. And the existing board and management team is an impediment because I mean, they want to keep their jobs. It's that simple, but it's the real owners of the business understanding how much better Ronnie may can be.
Is it fair to say that they're destroying value or they're just not creating value?
I mean, if you look at the performance, let's say like since COVID, active users is down 30 million, operating income is down, operating expenses is up. Every important metric is down considerably. So, you know, the company's bought back a lot of stock. There's no question about that. It's been a very significant buyback program, but you know, the spending two and a half billion dollars a year in sales and marketing and basically not growing active users is lighting money on fire.
So, whatever the expenses are today, how much do you think you can break it down percentage wise? Like, can you cut 20% of expenses, 50%?
I mean, it's a business that's spending over five and a half billion on 11 billion in revenue to run a business that essentially has no inventory and is very asset light. So, you know, 2 billion in cost cuts, I mean, if you look at GameStop as a good example, and I've committed to 2 billion in cost cuts at eBay, but if you look at GameStop as an example, you know, we've cut out SG&A's been reduced by 47%, and that was actually a business that was very difficult to cut costs. Like, there wasn't a lot of fat to cut at GameStop. It was already for the most part efficiently run and not a high margin business. eBay is basically like if you, I would say GameStop was in pretty good shape from an expense standpoint. It's that its overall business was cyclical and the world was betting against it for very good reasons because of the move obviously to digital gaming from physical software. eBay needs to be on like Ozempic. It's literally obese and it needs to, it is extremely, extremely overweight to an unhealthy degree. Like it's about to have a heart attack. But luckily the business has a very strong moat and it's able to carry that kind of weight. But it doesn't mean that it's healthy.
When you look at the cost-cutting you did at GameStop, how much of that is because of AI or other technologies versus just being a good operator?
I mean we're actually only starting to really leverage AI like in the past quarter. And so you know it was more just making the teams smaller. Like when I came in basically every single major publicly traded SaaS company somehow GameStop had a long-term contract with and was spending millions of dollars. And so it's consolidating the technology stack. It's having smaller teams. It's going deep into marketing spend looking at ROI. Basically whatever everyone tells you internally is pretty much the opposite. Because I mean you can't like, everyone is either reliant on the software, is worried about their jobs, is getting some kind of kickback. So, you kind of have to take a grain of salt in terms of even the feedback you're getting internally. But, you know, I look at running GameStop as like what would I do if I had one GameStop store? And if you have thousands of stores, you run it with the same level of frugality as a family business with a handful of stores.
Now, do you use AI on like a day-to-day basis? Or do you use AI to pick eBay out of the thousands of businesses that you could have gone after?
I have always long admired eBay's business. And I didn't want to be the CEO of GameStop. Actually, when I sold Chewy, I didn't really want to do anything, for the most part. And then, I lasted like a few months, and retirement wasn't for me. But, I'm very... eBay's business is, I mean...
It's, yeah, it's the one.
