I hear working at Amazon requires being available on call and working long hours. If this is the future I'm worried.
Not to worry you'll be hearing that less and less. You won't be hearing it from the WaPo anymore for instance.
Amazon and the "profitless business model" fallacy
91–100 of 141 posts
Re: Amazon and the "profitless business model" fallacy
#92Earlier quoted context omitted.
Money not spent is money that isn't working for you, but instead is just sitting in reserve, at best accruing interest. Amazon is betting it can get a much higher return, and so far, has been right.
"profit" and "money" are two very different things. "profit" is how much you are making at the end of the year, this is to be reinvested if you are efficient (as you suggest is good, i agree) "money" is the what is sitting in the bank, not being utilized. Would you say that a company who is breaking even is utilizing their cash properly? no, they don't have any cash to utilize, therefore profit and cash are different…
...or they could have just already utilized the cash, which is what Amazon is doing?
Re: Amazon and the "profitless business model" fallacy
#93Earlier quoted context omitted.
The accounting rules (GAAP) have only a loose correlation to how most modern large companies actually operate the levers of their businesses. Management teams of well-run companies spend very little time thinking about the formal financial statements. Accounting bears the same relationship to actually running a business that the Efficient Market Hypothesis does to actually effectively investing -- which is to say, al…
While I agree that GAAP only vaguely represents reality, Management teams of all well run companies /DO/ think about formal financial statements. These statements require thought or liability to potential jail time. In addition, the impact of these statements on financial markets (ie: stock price) is tremendous. Management damn well should be thinking about shareholder value.
> liability to potential jail time
Are there any examples of this? It seems to me the SEC didn't make much use of all the archived emails (guaranteed to be in place due to SOX) during the 2008 banking crisis which makes me generally distrustful of these formal written rules.
Re: Amazon and the "profitless business model" fallacy
#94Strangly, this was the business model of cable companies for the longest time. They never turned a profit. When they expanded, they could use the increased income stream to go deeper into debt. The profits and extra capital went into more expansion. Eventually, they ran out of room to expand, and where are they now? Someday, Amazon will need to face the brutal reality of profit.
Interesting that the other replies to your question are so assured of the dominance of the cable companies. In other words, the perfect industry to disrupt. Before Apple came along, Nokia, RIM and Windows Mobile were poised to rule the mobile world, and could not imagine being relegated to niche marketshare in merely 7 years…
Re: Amazon and the "profitless business model" fallacy
#95This is a dangerous narrative that links the founder to the company in the same way that Apple is forever linked to Steve Jobs.
Re: Amazon and the "profitless business model" fallacy
#96Earlier quoted context omitted.
> He probably has aces up both sleeves to clobber anyone that tries to make a move. The razor thin margins are a great moat in themselves.
I'm still trying to work out whether (1) ballard 's remarkable cascade of mixed metaphors was itself a joke, or (2) eru 's comment was poking fun at it, or (3) both comments were intended entirely straight and it's just coincidence that the density of metaphor mixture is so high. Both comments make perfectly good sense taken "straight". I'm leaning towards #3, with apologies to ballard and/or eru if I missed their jo…
I'm not a native speaker. And, I spent too much time with managers, recently.
So I wish it could have been 1 and 2, but for me it's 3.
Re: Amazon and the "profitless business model" fallacy
#97Its not uncommon for companies to reduce their profit by various stratagems to reduce the tax they pay.
For example Apples massive overseas cash pile that they dont want to repatriate and pay out to the owners of the company
Re: Amazon and the "profitless business model" fallacy
#98Earlier quoted context omitted.
> For Starcraft fans out there: It's like being broke because of focusing on building SCVs While I personally play Protoss, I think this is an awesome way of thinking about it. "Keep your money low" is a mantra that you must remember when playing SC2, and I've always been curious how that translates to actual economics. If I recall correctly, there was an actual paper written applying Starcraft economics to "real wor…
I'm not sure if it is a 100% perfect analogy to real-world economics, but the best analogy is that all money you use in Starcraft is "working capital". Money in the bank only does you any good insofar as it allows you to handle unexpected emergencies, all other cash should be deployed towards your goals. Which in Starcraft would be to defeat your opponent with generating more cash as a subordinate objective, and in b…
Starcraft uses supply depots to represent the recurring costs of supporting your army. Using the normal resources would over complicate the game. In a way you could be "in debt" if you ever don't have enough supply.
Re: Amazon and the "profitless business model" fallacy
#99The author may not fully appreciate the long game Bezos has been uniquely blessed to play: the sooner Bezos can effectively expand what's working, without over-expanding, it's bootstrapping on a massive scale: buying speed without diluting ownership to even more money sooner. It's not deficit spending (until it is), it's reinvesting profit to grow assets that are the body of the money monster. (For Starcraft fans out…
> For Starcraft fans out there: It's like being broke because of focusing on building SCVs While I personally play Protoss, I think this is an awesome way of thinking about it. "Keep your money low" is a mantra that you must remember when playing SC2, and I've always been curious how that translates to actual economics. If I recall correctly, there was an actual paper written applying Starcraft economics to "real wor…
I believe the business term is worrying about a "lazy balance sheet". You want every dollar working its bum off, not lazing around in a bank.
This is usually an argument for taking on debt to finance new projects.
That said, the complicated way capital gains and income tax interact in the USA mean that lots of investors prefer share prices to rise to any dividend; so when there's nothing to spend cash on, it just piles up.
Compare Australia, where franking credits mean that major companies regularly pay dividends. It's a different kind of complication, but I think on balance it's the better outcome.
Re: Amazon and the "profitless business model" fallacy
#100Amazon only has around 10 more years before 3d printing starts to kill retail. Beware.
I will bet you $100 that in ten years time, it will not be commonplace to 3D print a fully working: * Mobile phone * Bottle of beer * Sweatshirt or * Pear What do you say?
Starts to kill retail, not has killed it.
The most important thing for investor trust right now is that the trends are going the right way. In 10 years people will start seeing the writing on the wall for the current distribution model.