Ryan Cohen, a man with many titles who has been dragged through the mud in the media. But why? This article aims to show who Ryan Cohen is, what made him as an entrepreneur, and what his plans with his current endeavor are: turning GameStop into the ultimate destination for games and entertainment.
The Chewy era
Of Canadian origin, Ryan Cohen is the founder of Chewy, e-commerce giant in pet food and toys. Together with Michael Day, Ryan Cohen started Chewy because he missed the personal experience with the big pet retailers including Amazon and PetSmart:
“I focused on bringing a human element to e-commerce”
Ryan Cohen, Forbes 2020
Cohen learned a lot from his father. He often quotes him in interviews and has a great example of things he learned from him:
My dad had a glassware importing business, and he told me about how he was talking with his dad one day. His dad had pointed at two trucks. “You see those trucks there?” he’d said. “If what’s in one of those trucks will make you more money, and what’s in the other truck will make your customers happier, choose the one that makes your customers happier, even if you make less money.” That served as the guiding premise for Chewy.
Chewy is well known for writing holiday cards and sending them to customers, making personalized pet portraits, and sending flowers when an owner’s pet passes away.
Source: The Secret Behind Chewy’s Customer Acquisition Strategy | CommerceNext
“I love making customers happy,” Cohen says. “When people shop at Chewy, they really understand we care about them, we care about their pets, and they want to tell all their friends and family.”
INC.com
Intitial rejections from investors motivated Cohen:
Friedman: You were rejected by 100 different investors. What did you learn from the process? What made you keep going when you kept hearing no?
Cohen: For me, each no sounded like they just didn’t understand my vision. It was frustrating at times, but never discouraging. Those “no”s never made me doubt my strategy – it was the opposite. I was motivated by all the rejections and they just got me fired up.
Chewy Founder Ryan Cohen, Who Sold His Company For $3 Billion, Shares His Best Advice (forbes.com)
The lack of funding didn’t stop them from growing the company, however:
The initial lack of VC didn’t stop him from growing the company, but it forced him to be disciplined. “It wasn’t growth at any cost,” he says. “Free cash flow was the governor of growth.”
Ryan Cohen, INC.com
Their work with Chewy paid off massively. Chewy was bought by PetSmart in 2017 turning Cohen into a billionaire. Estimates are he was 32 at the time. Cohen stayed on as CEO and further increased sales.
Chewy wasn’t an ordinary commerce business; it was an e-tailer: an e-commerce retailer.
Chewy reported a net loss of $268 million between 2017 and 2018 despite growing sales. Expensive shipping costs are one of the reasons why. It eventually became publicly listed in 2019 at a valuation of $8.7 billion.
An interesting statement made by CNBC about this:
Source: Chewy.com, PetSmart’s online business, prices IPO at $22 a share (cnbc.com)
Cohen calls himself contrarian, which means he opposes public opinion and does what the thinks is best even if it is frowned upon:
I understood that thinking big was likely going to be misunderstood along the way. I’m contrarian by nature, so being misunderstood often validates what I’m doing.
Ryan Cohen, Forbes 2020
After selling Chewy, Cohen stepped down as CEO in 2018 and invested in Apple, buying 1.55 million shares, making him the largest individual shareholder of the company. He also invested in Wells Fargo.
The GameStop saga
In August 2020 the news broke Ryan Cohen had taken a big stake of 9% in GameStop, the then failing retailer. His stake was bought between the $4.58 and $6.18 price levels. Cohen wrote a letter to the board of directors urging them to take action in order to maximize stockholder value. He told them GameStop could become the ultimate destination for gamers.
The quotes above were taken from his letter, indicating Cohen was serious and needed GameStop to take action urgently.
He wasn’t looking for just an investment in the company or receiving a lone seat on the ten-member board that had overlooked years of digital revenue opportunities and presided over massive value destruction without assuming full accountability (Cohen’s precise words).
The CFO, Jim Bell was kicked out. Chief Customer Officer Frank Hamlin left, and George Sherman, GameStop’s CEO, stepped down. Three new directors were appointed: Cohen himself, Alan Attal, and Jim Grube. The board of directors shrunk to nine members after previous members informed the board they did not intend to stand for reelection.
GameStop’s new CEO became Matthew Furlong, who had experience working as an executive at Amazon Australia. He brought along a number of Amazon executives to fill roles, but none of them lasted very long.
In the coming years, GameStop went through several more management changes, including CFO Mike Recupero and Matt Furlong leaving.
The new CEO became the man himself, Ryan Cohen.
Ryan Cohen’s salary would be $0. Of course, his net worth is big and his investments are plenty, but taking a $0 salary means you’re not there for the money; you want to put in the time.
In an interview from 2020, when talking about Chewy and Cohen’s advice for entrepreneurs, he said the following about taking risks:
My biggest risk would have been not taking risk. The risk of going head-to-head against Amazon. The risk of insourcing fulfillment. The risk of building a company in Florida rather than a popular tech hub. The risk of spending $3 million a month on TV ads, more than Home Depot’s budget. The risk of hiring expensive executives even though we weren’t profitable. These decisions were some of the most controversial and required me being comfortable betting against conventional wisdom, and were often contrary to the advice of my board. Suffice it to say, I was not the most popular board member.
Ryan Cohen, Forbes 2020
The last sentence is an interesting one.
After his initial stake of 9% in 2020, Cohen added to his position in March 2022 with 100,000 shares. Another buy was made in June 2023 when he bought an additional 444,000 shares.
His total ownership of GameStop is around 12%.
To infinity… and Bed Bath Beyond!
In March of 2022 the news broke of Ryan Cohen having bought 9.8% of Bed Bath Beyond’s shares.
Cohen’s approach was the same as the one he took approaching GameStop: he sent a letter to the board and urged them to change their business.
Source: Cohen’s letter to the board of BBBY
The above seems reasonable, but Ryan Cohen means business. He was tough on GameStop’s old management and he wanted BBBY to change their course as well. He even provided clear advice for them:
Source: Cohen’s letter to the board of BBBY
The following shows exactly why Cohen and co. have been mostly quiet regarding GameStop’s guidance and roadmap:
In light of our long-term focus, we are not an investor that demands guidance. In fact, we appreciate that Apple, one of our long-term holdings, suspended guidance amidst pandemic-related uncertainty and has never given away a detailed strategy for all of its competitors to see. We dislike when a management team spends time accommodating Wall Street, engaging with television pundits and telegraphing forecasts to the competition. We believe management’s time is best spent focusing on execution that drives a better customer experience and tangible value creation.
Ryan Cohen, in his letter to the board of BBBY
“Underpromise and overdeliver”. Cohen asked the same of BBBY, as long as they would be working hard on improving the business.
Cohen extended a hand to help them. The board responded to Cohen’s letter saying they would carefully review it and hoped to engage constructively around the ideas. At the end of March BBBY announced a cooperation agreement with Cohen, adding three board members. The company would also explore alternatives for the Buy Buy Baby brand.
BBBY tried their best, but the wounds turned out to be too deep. They reported quarterly decrease after decrease, price targets were constantly lowered, and their CEO announced he would leave. BBBY was in rough waters before, but was in dire straits now. Price targets were lowered towards the $4 to $0 range.
Some time later Cohen decided to sell his stake.
Source: Investor Ryan Cohen completes planned sale of Bed Bath & Beyond stake, stock falls 40% (cnbc.com)
The media reported it as Cohen dumping his shares on investors and leaving them with the bags. The SEC announced they had started investigating Cohen’s sale of shares:
Invest in a company to give them a helping hand, offer advice free of charge, give them some time to make a few power moves, and get slandered for it. Taking a stake in a company and selling that stake almost half a year later doesn’t seem abrupt; lots of things happened in half a year. In fact, note what Cohen wrote at the end of his letter to BBBY’s board:
Cohen clearly stated his focus was on GameStop. He didn’t even want a seat on the board. Calling it a pump-and-dump seems rather odd when the investment took five months.
An average investor who uses common sense starts investing because of a thesis. Cohen’s thesis was that BBBY might turn itself around, acquire money through the sale of its Buy Buy Baby component, pursue greater focus, and evaluate a full sale to a well-capitalized acquirer. Cohen provided a roadmap for BBBY to act upon.
Five months later Cohen decided his thesis for investing hadn’t turned out well so he decided to sell his investment. What was he supposed to do, hold until it went to $0?
Things became even worse for Bed Bath and Beyond: they announced a loan, the closing of stores, share offerings, layoffs, and the whole ordeal took a grim turn when CFO Gustavo Arnal passed away.
BBBY filed for bankruptcy protection in April 2023.
The meme stock king
This is what brings us to Cohen’s new title given to him by the media. Cohen is often portrayed as a so-called ‘meme stock king’. This is purely because of his involvement with Bed Bath and Beyond and GameStop, companies which are or were (in GameStop’s case) on the brink of bankruptcy, bashed by the mainstream channels for being related to the Reddit and 4Chan platforms. The full reasoning behind the bashing can be read in our article summarizing the GameStop saga so far.
We can only think of two reasons you would slander someone with terms like that. One is to discredit them. That, or there must be something they did to piss someone off.
People invest in or trade so-called meme stocks for varying reasons, but discrediting those investments or trades with two words (meme stock) is a great way to discredit yourself, in our opinion.
If it takes someone five months to determine for themselves whether or not a company follows someone’s free advice and still remain with a position in that company, then that someone’s investment reasoning must be flawed.
Basing your investment decisions on what another investor does can lead to big losses, that’s the simple truth.
What Cohen IS though, is a meme lord. He is active on Twitter and occasionally posts memes making fun of himself and the corporate world.
Source for all: Ryan Cohen (@ryancohen) / X (twitter.com)
Teddy
A clear reference to his father Ted, Cohen published a series of children’s books titled ‘TEDDY’ with subtitles dealing with different situations and offering life lessons.
Source: Wisdom for our little ones – Teddy
Source: Books – Teddy
Throughout his life, his father Ted has been a big influence on Cohen’s decision-making and character. He also quoted his father during the annual meeting of stockholders on June 15, 2023:
I’ll speak briefly. My father always told me talk is cheap. Actions speak louder than words. My responsibility is making sure GameStop is run by managers who treat company money like their own. In corporate America, the people in charge, the professional directors and management teams are not aligned with shareholders. They’re always the recipient of stock grants. However, they rarely purchase company shares with their own savings. There’s a big difference between risk-free compensation for showing up and putting a meaningful amount of your own money at risk. As a result, money is wasted, work is delegated, and a lot of time is spent managing to short-term expectations and pandering to Wall Street. I like people who roll up their sleeves and do real work. People guided by principles, not robots who seek to rest invest. In corporate America, there’s no shortage of overpaid executives, bad capital allocation in chronic waste and serial delegators. Much as this behavior is both predictable and reprehensible, it is precisely what creates opportunities.
Ryan Cohen, GameStop annual meeting 2023
Thank you for being a shareholder.
Source: Ryan Cohen (@ryancohen) / X (twitter.com)
Cohen for 2024
End of 2023 and GameStop announces Ryan Cohen has taken on another role: Chief Investment Officer. Whether this is a role that’s prominent in other companies is not known to us, but this new role basically means Cohen gets to decide what investments GameStop makes. The thought of a Warren Buffett type of investing through GameStop is a promising prospect. Of course, the media called it “inane” and “alarming“:
Source: Ryan Cohen’s ‘Inane’ Move Is Bad News for GME Stock | InvestorPlace
Cohen and cos. efforts paid off: GameStop became profitable for the first time in years in 2023. Although revenue dropped, GameStop’s new focus, as described in their form 10-K, is to create new revenue streams.
Source: SEC Filing | Gamestop Corp. (gcs-web.com)
As of now, Ryan Cohen’s roles are:
- CEO of GameStop
- Executive chairman of the board of directors of GameStop
- Chief Investment Officer of GameStop
Source: Ryan Cohen (@ryancohen) / X (twitter.com)
When you go through Cohen’s history, interviews, work at Chewy and GameStop, his business with BBBY, and his tweets, you get a pretty good image of who Ryan Cohen is and what drives him.
He likes to work hard and expects the same from others:
He expects leaders to lead instead of raking in millions without accountability:
He is willing to put his own money at risk, which is shown through his massive stake in GameStop:
Source for all of the above: Ryan Cohen (@ryancohen) / X (twitter.com)
Cohen has an insane drive for customer experience and satisfaction, he is contrarian and goes against the opinion of the status quo, and he sees opportunity where others don’t. If these things make him less popular on the board, he’s fine with it.
GameStop is well under way after being turned around from bankruptcy towards profitability with clear current objectives: creating new revenue streams while establishing omnichannel retail excellence which leverages brand equity. If they manage to achieve this, not only is GameStop becoming the retail and e-commerce heavyweight champion, it will also become the ultimate destination for gamers and entertainment seekers.
That’s what Ryan Cohen initially told GameStop’s old board in his letter.
Judging by what we found out about him, his track record, his entrepreneurial vision, combined with his meme-ing, Ryan Cohen looks like the perfect captain at the helm.
Cohen is a pretty nice guy and he means business.
As a final note, there’s a fun interview with Ryan Cohen done by Joe Fonicello of GMEdd.com. Give it a watch if you want to learn some interesting insights.
SandersonClay 