Key Takeaways

  • Ryan Cohen views eBay as bloated, spending $5.5 billion annually on operating expenses for an asset-light, $11 billion business with 11,500 employees.
  • He proposes drastic cuts to Sales, General & Administrative (SG&A) costs, citing his success at GameStop where he reduced SG&A by 47% – an $800 million saving – partly by “almost turning off marketing.”
  • Cohen specifically targets eBay's $2.5 billion marketing budget, arguing much of it is "unproductive" and sustained by "perverse incentives," such as job protection and vendor kickbacks, rather than delivering real user growth.
  • The speed of these cuts would be driven by his plan to quickly pay down debt from a potential leveraged acquisition, forcing an immediate increase in earnings by operating eBay like a lean, family business.

The Method: Run It Like a Debt-Ridden Family Business

Ryan Cohen has a blunt assessment of how large, established companies like eBay operate: they’re inefficient, wasteful, and riddled with “perverse incentives” that inflate costs. His proposed solution for eBay isn't subtle; it's a shock-and-awe campaign to strip out billions in what he calls unproductive spending.

Cohen looks at eBay, an $11 billion business with no inventory and an asset-light model, and sees a company inexplicably spending $5.5 billion on operating expenses with 11,500 employees. To him, that simply doesn't add up. “They're spending $5.5 billion dollar on operating expenses on 11 billion business that has no inventory and it's asset light. So it just there's 11 and a half thousand employees and it doesn't make sense,” Cohen said.

His playbook, refined during GameStop's turnaround, is simple: attack Sales, General & Administrative (SG&A) expenses with extreme prejudice. At GameStop, he oversaw a 47% reduction in SG&A, carving out $800 million. A core component of this was a radical approach to marketing. “We've dropped SGNA by 47%, $800 million by making marketing more efficient, almost turning off marketing,” he explained.

For eBay, Cohen sees its $2.5 billion marketing spend as a prime target, especially when it only yields 1 million new users. He believes much of this budget is not generating actual returns but rather serving internal agendas. “Most of that marketing spend isn't making money, but everyone's trying to protect their jobs and there's kickbacks. There's all kinds of perverse incentives,” Cohen noted. He aims to make those cuts rapidly because, under his plan, a leveraged eBay would need to pay down debt fast, demanding immediate earnings growth. “It's something that is going to happen fast fast because I'm putting leverage on this thing and I don't want to run a leverage business. So I'm not going to run it hot. I'm going to pay down the leverage and I'm going to increase earnings.”

Where This Breaks Down

Cohen’s aggressive cost-cutting works brilliantly in situations where a business is clearly bloated, has an entrenched corporate culture protecting inefficient spending, and possesses a strong, established brand that doesn't rely on constant, expensive marketing to acquire every single customer. It's a method for businesses that have lost their way, spending billions to maintain the status quo rather than innovate or grow profitably.

However, this approach isn't universal. For startups or growth-stage companies, "almost turning off marketing" can be suicidal. Early-stage businesses often need aggressive user acquisition and brand building to achieve escape velocity. Furthermore, while "perverse incentives" are real, not all spending is wasteful. Some marketing builds long-term brand equity, some employee functions foster innovation, and some overhead ensures compliance and stability. Blindly slashing without understanding these nuances can cripple vital functions, leading to a race to the bottom that sacrifices future potential for short-term gains. It also relies on an owner with near-absolute power to bypass internal resistance, a dynamic rarely seen outside of a complete hostile takeover or a founder-led startup.

What to Do With This

Instead of just thinking about cost-cutting, adopt Cohen’s "owner's mentality" and scrutinize your own company's spend as if you had just taken on massive debt and had to increase earnings tomorrow. Pull your last three months of major operational and marketing expenses. For each line item above $1,000, ask yourself: Is this making us more money than it costs, or is it a legacy budget, a vendor we're too comfortable with, or something primarily sustained by internal inertia? Cut or renegotiate any spend that doesn't have a clear, immediate, and measurable return, even if it feels uncomfortable.