Name: Amazon: The company that doesn't make money
Uploaded: 2020-10-11T19:21:10.000Z
Duration: 5 min 12 s
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Past simple

If you had invested just 90 dollars in Amazon when it went public, back in 1997.

Your investment would worth today over 100 thousand dollars.

The comparative

And if you would have been a little more generous and raised that number to 900 dollars, you

would have been today officially a millionaire.

But how is it possible that such a huge tech company with hundreds of thousands of employees

Technically it's profitable, but its income is absolutely insignificant compared to its

In 2017 for example, it made a little over 3 billion dollars, that number might seem

a lot, but when you consider that it was valued at 600 billion dollars, that number becomes

And it's not because the market was down.

A year before that it made 2.3 billion dollars, and for the rest of its existence, it was

either at a loss or making just a few hundred million.

If you Compare that to other tech giants, it will seem like Amazon is about to go broke.

When Apple was valued at 600 billion dollars for example, in 2016, it made over 45 billion

If you take a look at any other tech giant, you will realize that all of them are multiple

times more profitable even though their market cap is smaller.

Even if Amazon makes only few hundred million, no one will panic, and investors will keep

throwing money into Amazon, and the stock price will keep rising, and it will defiantly

surpass apple in the coming future, because of Bezoses strategy.

In his first letter to shareholders in 1997, he said - its all about the long run!

In other words, Amazon would prioritize long-term advantages over short-term profits.

And focus on delivering as much value as possible to the customers, by lowering the prices to

Attack any industry aggressively until your competitors start bleeding and running out

of cash until you dominate the market, even if that means losing money in the short-run.

And once you are on the top of the hill, rewards are incredibly huge.

Then you can raise the prices and do whatever you want.

In 2010 Amazon decided to get into a diaper business and daipers.com was the leading online

So, Amazon simply chose to acquire that company, but the founders refused to sell.

Amazon threatened to drive diapers price to zero if they wouldn't sell and guess what?!

They lowered their prices and offered amazon prime for free for 3 months for parents to

the point where daipers.com literally started bleeding cash and was forced to either shut

But that's just one of many industries that Amazon tried to dominate.

There is Whole Foods Market, twitch, audible, IMDB, Alexa, Zappos, Amazon web services,

Amazon studios, and the list goes on and on where Amazon is already leading the industry

If there is an industry that Amazon isn't competing in yet doesn't mean they aren't

However, this incredible successes didn't come cheap.

In 2014, Amazon introduced the fire phone and was ready to conquer the smartphone industry,

The phone wasn't really bad, it had a lot of new features that many phones didn't have

at its time, and it was priced just under 200 dollars ($199) with a 2-year contract.

After spending hundreds of million dollars, even though Amazon reduced their prices significantly

over time to the point where phones were sold at a loss, the project turned out to be a

complete disaster and Amazon had to shut it down a year later.

Its just one of many examples of how Amazon failed.

There was once a company named Standard Oil Corporation that was founded by John Rockefeller.

The company took over its logistics and everything else and drove the prices to their bare minimum

to the point where they crushed their competitors and dominated the entire oil industry.

It had all the resources to control the global oil supply, but in 1911, the US Justice Department

sued the company and broke it down in 34 little companies.

And since Amazon is taking over one industry after another, will it grow so big one day

that it will be unstoppable or end up like Standard Oil Co.?

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