Ryan Cohen built Chewy into an e-commerce giant. So when he got involved with GameStop, it felt like a no-brainer to apply his winning playbook. He thought the video game retailer, facing an upcoming console cycle, just needed an e-commerce shot in the arm. He was wrong. And he'll tell you himself, it was "really, really stupid."
Cohen's candid admission on the All-In Podcast isn't just self-deprecating; it's a critical lesson for any founder. Your last success is often the biggest trap for your next venture. What worked brilliantly for pet supplies was almost fatal for video games, proving that even a proven blueprint can lead you straight into a wall if you don't ruthlessly adapt.
The Playbook That Almost Broke GameStop
Cohen initially eyed GameStop because of the upcoming console cycle. He saw a cyclical business that typically did well at the start of new PlayStation and Xbox releases when hardware and software were scarce. The goal, he explains, was to simply “make GameStop more like Chewy.” He had a bias, a successful mental model he was determined to force onto a different beast. This meant pushing an e-commerce strategy that didn't fit GameStop's unique challenges, leading to major inventory problems.
It took him about a year as an activist investor to realize the gravity of his mistake. "The original plan," Cohen said, “I learned a lot at GameStop. 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. And it took me about I don't know maybe just over a year to realize that was really really stupid.”
This wasn't a tweak; it was a fundamental miscalculation. The market didn't need another Chewy-style e-commerce player; it needed a GameStop that understood itself.
The Pivot to Profitability: Maniacal Cuts & Collectibles
Upon becoming CEO, Cohen didn't just course-correct; he slammed on the brakes and ripped the steering wheel. He saw the financials didn't make sense. The new strategy centered on what he calls "maniacal cost cutting" and a relentless focus on operational efficiency. He peeled back the layers to identify what GameStop was actually good at: the pre-owned side of the business.
This meant leaning into their existing brick-and-mortar strengths, which included a surprising goldmine: collectibles. “The business is a leader in the collectibles category,” Cohen noted, a segment where software now makes up a very small percentage of sales. This pivot wasn't glamorous, but it was effective.
The numbers speak for themselves. As David Sacks highlighted, collectibles now account for 42% of GameStop's revenue, bringing in $350 million in Q1. Overall, Q1 revenue hit $835 million, growing 14% year-over-year. SGNA (Selling, General & Administrative expenses) was slashed from $228 million to $202 million. The company boasts $9.7 billion in cash and $333 million in free cash flow, with a board-authorized share repurchase. These aren't just minor improvements; they're the results of a complete strategic overhaul.
Talent Spotting in the Trenches
Beyond the financials, Cohen's pivot included a human element. He didn't parachute in a whole new C-suite of outsiders. Instead, he identified and worked directly with the company's existing talent. “The people who know GameStop the best have been the people that have been there for a long time,” he explained. By empowering internal experts, he tapped into institutional knowledge that outsiders, no matter how brilliant, couldn't replicate.
What to Do With This
Pull your last three major strategic wins. For each, identify the core assumptions and specific context that made it work. Now, look at your next big initiative. Are you unconsciously trying to clone those past wins, or are you critically assessing the unique context of this new challenge? This week, make a list of your company's core, unsexy strengths – the things it already does well. Then brainstorm three adjacent, high-margin categories you could grow into, just like GameStop did with collectibles, rather than trying to become something you're not.