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Why Amazon Has No Profits and Why It Works

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Re: Why Amazon Has No Profits and Why It Works

#201

Post by EliRivers »

baddox wrote: post #186
apalmer wrote: post #158

Earlier quoted context omitted.

I am just pointing out that as a stock holder if the only value of buying AMAZON stock is that you expect that someone else down the line is going to pay you more to buy it than you paid for it then thats similar to how a Ponzi scheme works. I dont think Amazon is taking a bad approach but, realistically feel Amazon is not going to produce any other return for its investors for the next ten years until it completely…

> I am just pointing out that as a stock holder if the only value of buying AMAZON stock is that you expect that someone else down the line is going to pay you more to buy it than you paid for it then thats similar to how a Ponzi scheme works. By that definition, literally every investment would be a Ponzi scheme. A savings account would be a Ponzi scheme.

literally every investment would be a Ponzi scheme.

Only the ones that you only expect to turn a dime on by finding a bigger fool to buy it from you. If the investment is something that returns money to you (for example, dividends), you're not expecting to make money by selling it for more. You're expecting to make money because you own a small piece of a business that makes money for its shareholders. I have a number of investments that I expect I will never sell (or at least, am not hoping to sell for more that I paid for it); I'm very happy just being given a nice share of the profits every year.

These investments do not require anyone else to buy in, ever; hardly a Ponzi scheme.

Re: Why Amazon Has No Profits and Why It Works

#202

Post by 1stop »

hnnewguy wrote: post #129
mseebach wrote: post #99

Earlier quoted context omitted.

Amazon makes a profit, it just invests all of it in itself, returning you a more valuable stock instead of a dividend. Investors let them do it because the investment made with the profit is worth more than the cash would be. Even with all that, the value of a company that doesn't turn a profit isn't 0, it's the value of it's assets, and Amazon has a lot of those.

> the value of a company that doesn't turn a profit isn't 0, it's the value of it's assets Touche. They also have liabilities. I suppose we could be even more precise and say the price is $0 above the expected value of the net assets at the time of liquidation. But my point stands.

Well go and try a hostile take over of amazon where you purchase 100% of the stocks for $1. Given it's worth $0, $1 is infinitely more than they are expecting.

Or admit that your point is absurd.

Re: Why Amazon Has No Profits and Why It Works

#203

Post by philwelch »

smacktoward wrote: post #109
philwelch wrote: post #88

Earlier quoted context omitted.

In the 1990's, undoubtedly Gates.

Yeah, that was my thought too. > John offered three choices to rival refiners, cash, Standard Oil stock, or to get crushed ... is also a pretty good description of how Microsoft approached anyone they considered competition in the '80s and '90s: you either licensed your software to them ("cash"), sold your company to them ("stock"), or got destroyed by them. Gates' charitable efforts have earned him a warmer and fuzz…

> The right choice was to have taken stock, which would have made you fabulously wealthy. If you were any good at the oil business at all, he would also offer you a job, which again would have eventually made you very very rich. He had an insatiable hunger for quality staff. It was never a good idea to bet against Rockefeller.

That was eerily reminiscent for me, too.

Re: Why Amazon Has No Profits and Why It Works

#204

Post by grogenaut »

zanny wrote: post #159
hga wrote: post #59

Earlier quoted context omitted.

The only monopoly I observe them having is in trust. If I see a seller with 96% or better feedback on a minimum volume of business, I have a lot of faith I'll be satisfied one way or another with the transaction. Compare to eBay, where a fairly recent transaction by my father, buying an iPhone, was a scam, the cellular radio didn't work (rest including WiFi did), and the seller, who officially had a good reputation,…

I've been buying more stuff off ebay, mainly on the basis that the site is hugely biased towards the purchaser and not the seller. I've sold stuff as well, but I'm always afraid a purchaser could just say I sold them a fraudulent transaction, trash my rating, and Ebay takes the money back and I'll never get the product back.

I'm interested in how you lose as a seller as I've never been able to claw back any of the fradulent sales that I've bought from.

Re: Why Amazon Has No Profits and Why It Works

#205

Post by wodenokoto »

tim333 wrote: post #131
mkaziz wrote: post #52

Earlier quoted context omitted.

If they don't want a profit, what's their motivation for existing?

Profit in this case is generally a quantity calculated by accounting rules (US GAAP probably) and is a different thing from wealth created. Amazon has produced a lot of wealth for it's shareholders, enough for Bezos to be worth ~$30bn build spacecraft as his hobby. The difference is more obvious with a company like Facebook. Say they spend $1bn building the company from zero to 500m users and at the same time receive…

But in the end that wealth is based on people's belief that 500m users can be turned into a profit.

Re: Why Amazon Has No Profits and Why It Works

#206

Post by baddox »

EliRivers wrote: post #201
baddox wrote: post #186

Earlier quoted context omitted.

> I am just pointing out that as a stock holder if the only value of buying AMAZON stock is that you expect that someone else down the line is going to pay you more to buy it than you paid for it then thats similar to how a Ponzi scheme works. By that definition, literally every investment would be a Ponzi scheme. A savings account would be a Ponzi scheme.

literally every investment would be a Ponzi scheme. Only the ones that you only expect to turn a dime on by finding a bigger fool to buy it from you. If the investment is something that returns money to you (for example, dividends), you're not expecting to make money by selling it for more. You're expecting to make money because you own a small piece of a business that makes money for its shareholders. I have a numbe…

The definition now requires defining what it means to be a "bigger fool."

Many investments do not earn dividends, including ones that are widely considered to not be Ponzi schemes.

Re: Why Amazon Has No Profits and Why It Works

#208

Post by TeMPOraL »

dragonwriter wrote: post #179
TeMPOraL wrote: post #153

Earlier quoted context omitted.

That's what I'm actually hoping will happen to services - that they will actually become function calls . For instance, why can't I install a local print shop as a system printer? I do some graphics work, then I click File->Print..., pick the "Printing Company XYZ", alter preconfigured defaults if needed, OK, and the next day a courier brings me my print job, all payments and address information transfer being handle…

> For instance, why can't I install a local print shop as a system printer? I'm pretty sure that FedEx Office (formerly FedEx/Kinkos) has supported doing that for many years. I suspect they aren't alone.

dragonwriter, btgeekboy, mindcrime - thanks, I never heard of that (I live outside US).

A few minutes of Googling didn't turn out what I was looking for though. I can see an "upload and print" feature on FedEx website, I can see a dedicated mobile app that apparently can print files via FedEx...

... but what I was looking for is something that pretends to be a normal printer, so when i do File->Print in Word or Photoshop, I can choose it as a destination, much like we used to do with "PDF printers", which were programs that installed as printers but outputed PDF files, back in times when MS Office couldn't do PDF export.

So if I'm missing an obvious hyperlink to that, could you please help me out here and post it? ;).

In general, I don't want print shops to start making mobile apps or (even worse) desktop apps to "streamline the process" (i.e. scare the shit out of the living with crappy UI and "upselling opportunities"). My dream is for them to integrate into the system, like every self-respecting piece of consumer hardware does. In the end, I might even not care at all which print shop is doing the job (much like I don't care where I order Asian cousine - those restaurants are all commoditized - I only care about it to be hot, tasty and delivered on time). In a perfect world, I'd love to have it reduced to a single argument, a drop-down in printer settings dialog (but I'd happily accept a system printer per printing shop for now).

Re: Why Amazon Has No Profits and Why It Works

#209

Post by ignoramous »

nikcub wrote: post #181
exelius wrote: post #24

I listened to a talk by Amazon's CTO, Werner Vogels, where he was explaining that Amazon's entire strategy is to build an infrastructure for itself, then rent that infrastructure out to its competitors. That way, increased competition can actually fuel your growth. The talk was about APIs, but Amazon views APIs as a general term: "Fulfilled by Amazon" is an example of a non-technical API. Likewise, I think Amazon's s…

> Costco comes to mind That isn't a coincidence. According to[0] "The Everything Store"[1], the latest biography of Amazon, Bezos picked up the model for Amazon retail from Costco founder James Sinegal. The first aspect was "value trumps everything" - where prices would be slashed and net margins thin. The second was the subscription model - Bezos learned that 70%+ of Costco's profit was from the membership fees. It…

Amazon Prime isn't an idea inspired by Costco's membership model, AFAIK. The idea came during Company's annual "Up the River" conference where Amazonians gather for a two-day brain-storming sessions.

Re: Why Amazon Has No Profits and Why It Works

#210

Post by gadders »

igravious wrote: post #77
vinceguidry wrote: post #66

Earlier quoted context omitted.

> I listened to a talk by Amazon's CTO, Werner Vogels, where he was explaining that Amazon's entire strategy is to build an infrastructure for itself, then rent that infrastructure out to its competitors. This was the game played by John D. Rockefeller. He had so much infrastructure built up by the time they split up Standard Oil, that each new state Standard Oil immediately had everything it needed to keep operation…

Blimey. Fascinating. Sounds like a rather frightening and ruthless individual. Am curious. What would your nominations be for the Rockefeller of the tech (software/hardware) world? Ever thought about that?

To be clear, though, I believe he was ruthless in business, as, say, Michael Jordan or Floyd Mayweather is ruthless in sports.

AFAIK he wasn't off kicking puppies and punching beggars in his spare time. You can be a ruthless businessman and perfectly good human being.

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