Hidden behind the saga of GameStop and the battle between Reddit, Hedge Funds, Main Stream Media, etc. is really a tale of transformation. The transformation of a historically brick and mortar company to an e-commerce company. Learning about the person behind this transformation is yet another way that we can all look beyond the headlines and actually look at whether GameStop actually does have a future.
For the full writeup, please follow this link to this entrepreneur.com article written by Ryan Cohen.
Ryan Cohen is the founder and former CEO of Chewy.com, a company he started when he was 25 years old. In 2017, Cohen made history when he sold Chewy to PetSmart for $3.35 billion in the largest ecommerce deal in history. In 2019, Chewy went public at a valuation of $8.7 billion.
Ryan Cohen cites the following five principles as critical to his success in building Chewy.com and investing. Below are excerpts taken directly from the article that Ryan Cohen wrote himself.
Watch your expenses
Disciplined capital allocation is one of the most important skills for running a successful business. Thanks to my father, I had the privilege of learning this firsthand. He kept track of every expense —his power bills, daily gasoline prices that impacted transportation costs, the individual prices of hundreds of glassware products that he sold. My father also kept tabs on Chewy’s metrics. He memorized the key performance indicators in both of our businesses.
At Chewy, we had maniacal discipline when it came to how we spent money. The company-wide culture of frugality came from his example. Free cash flow was our unwavering governor of growth. We grew Chewy from $200 million in sales in 2013 to $3.5 billion in 2018 while spending only $130 million in capital, all of which went into opening distribution centers across the country and acquiring new customers.
Delight your customers
My father always repeated this quote from his own father: “If you take a carload of this (pointing to a pallet of glassware) you’ll make more money. But if you take a carload of that (pointing to a different pallet), you’ll make less money, but you’ll keep the customer. So, take a carload of that.”
When we started Chewy in 2011, selling pet food online wasn’t a novel idea. The field was crowded with competitors, including Amazon. But our mission was to delight customers in a more personal way. We believed combining the experience of the neighborhood pet store with the convenience of shopping online was a key differentiator. The focus was fast shipping, competitive pricing and providing customers with a hyper-specialized experience. My father showed me how building lifelong relationships with customers was far more valuable than optimizing for short-term profits.
Be the person others want to follow
My father led by example, but not in a deliberate way. It’s who he was. He never patronized anyone. He admired the blue-collar worker. I watched him roll up his sleeves and help his employees move shipments of glassware from trucks into the warehouse, then put his suit jacket back on, shirt drenched in sweat, and do administrative work. I’ve never seen anyone work harder.
I was fortunate to find employees at Chewy who worked relentlessly to grow the company from a three-person operation to a household brand with more than 10,000 employees. We didn’t disrupt the pet industry by accident. Our team made huge sacrifices. We opened our first fulfillment center in early 2014, and everything from the warehouse management system to the Wi-Fi would constantly break down. The team worked 16-hour days for weeks until our supply chain was humming. Everyone from the fulfillment staff to the directors and executives were committed to Chewy’s success. You don’t get that level of dedication by leading through fear. My father always said, “You catch more bees with honey than with vinegar.”
Take the long view
My father was never looking to make a quick buck. He had no interest in material possessions. Every year, through thick and thin, he invested his savings into the stock market. He believed the real money was made through time in the market, not timing the market. When I was 13, he gave me a chart comparing real estate to stock market returns since the 1920s. Real estate annualized returns were around 4 percent, and the stock market was around 9 percent. It didn’t take long for me to figure out which I preferred. I’ve been investing ever since. My father never invested in any fancy funds or paid management fees. He bought blue chip companies and held them forever. His 20-year annualized stock returns were over 10 percent. He never borrowed money or paid interest.
As we scaled Chewy, many advised us to slow down and raise prices. We disagreed. Key to our success was obsessing over customers and market leadership. Over the long term, customers and profits intersect.
Entrepreneurs don’t operate with a handbook. My father taught me how to be independent and trust my own moral compass. He encouraged me to separate myself from the herd and think critically. When I told him I had no desire to go to college, he shrugged. Whether he agreed with my decisions or not, he supported me unconditionally. Letting me make my own decisions sowed the seeds for me to become an entrepreneur. The confidence to never compromise my vision of building Chewy into the largest pet retailer came from knowing if I failed, he would always love me.
For 45 years, he was the first employee to open his office and last one to leave. He showed me how perseverance and discipline ultimately pay off. Not only was his work ethic unmatched, so was his commitment to family. He gave me unconditional love and showed me how to be a father. Above all, he taught me that the best decisions come from heart, instincts and empathy.
I don’t know about you but when I read this article written by Ryan Cohen, I am even more bullish about the long term transformation of GameStop. These qualities and characteristics truly inspire and if GameStop can execute this transformation with “gamers”, they could capture the hearts and minds of a market that is growing exponentially. Just check out a few pictures of the test GameStop location of the future.
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