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  • 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.

  • 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

  • doesn't make money.

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

  • size.

  • 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

  • irrelevant.

  • 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

  • dollars.

  • 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.

  • But guess what?!

  • No one really cares!

  • 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

  • their minimum.

  • The philosophy behind it is simple.

  • 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

  • retailer.

  • 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?!

  • That's precisely what they did.

  • 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

  • down or sell to Amazon.

  • I think you can guess what happened.

  • 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

  • or competing to get there.

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

  • planning to take over it.

  • However, this incredible successes didn't come cheap.

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

  • at least that's what they thought.

  • 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.

  • ( 2015).

  • 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.?

  • we will have to wait and see

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  • Thanks for watching and until next time.

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

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