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Comment by Analemma_ | Hacker News Reader

The really terrifying thing about Amazon is that investors allowed them to operate at a loss for decades, which is a luxury afforded to nobody else. How are you supposed to compete with that? Even if you knew how to build a competitor to Amazon, the market would never give you enough time to do it.

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> The really terrifying thing about Amazon is that investors allowed them to operate at a loss for decades, which is a luxury afforded to nobody else.

I would argue that is because nobody else posts consistent growth rates like Amazon does. They are still hitting about 40% YOY growth rates which means they double their revenue in 2 years and grow it 32 times in 10. That is insane for a company with 100 billion in sales.

But it's not really a loss, but rather a continuing bet on the company's growth prospects. Reinvesting free cash flows at the expense of paying dividends is arguably one of the main reasons Amazon is the behemoth it is today. Investors "afforded" them that luxury because they believed in the potential.

Retain control of the company and deliver 20 - 30% yoy growth and you can do whatever the hell you want.

Amazon is a darling to investors.

It is now, but for a long time investors lamented Amazons self investment and long-term outlooks.

Some investors, bloggers, and websites that need clicks lamented it. The ever increasing market cap implies that obviously a greater share of investors did not lament it.

Which is fine; those people chose not to invest in Amazon.

Actually only sort of, it's likely only because Bezo's retained enough control to fight off an activist investor with a shorter term horizon. Structuring themselves to insulate from takeover by short term interests is something that several startups have conciously done.

That luxury was earned. The competitor would need to offer the same level of consistent high growth YoY and achieve one goal after another, thats the hard part.

Amazon is great example of how the short-term focus of public company CEOs won't end well. Long-term thinking is best for building a valuable company.

This is a classic "Short term thinking, what's a long term?" comment that arrives often on articles like this.

Start thinking more long term, and not just "how can I make a profit RIGHT NOW?!"

It also helps that virtually all their competition is in a race to the bottom of making customer service, the stores themselves, the shopping experience, etc. all markedly worse to cut costs.

I have never once heard of a company made successful by cutting costs. Sure you can defer the death, but the death is still coming. You're just buying time.

The competition was caught competing against a company that has a vastly different cost structure, namely that they don't have to even maintain buildings, have all that staff, and take on all the liability that comes with having people in your stores.

There's no way you can compete with that, the people have voted that they would rather order many things online than go to the store for it. I don't care how much service you provide, but for 90% of the things I buy, being able to do it wherever I am and having it show up to my door is way better than going to try and find it.

I feel the same way, but the thing is, there are plenty of things I need to buy and will need to buy someday that I know nothing about, and would very much appreciate the expertise of a proper salesman (not a salesman in terms of the coffee-voiced dolts we're so accustomed to, I mean a real salesman) when making my purchase decisions, and you just can't find them anymore, with rare exceptions.

I don't know if that would save many businesses, but it seems insane to me to take that one point where Amazon literally cannot compete on, and obliterate it.

Unfortunately, it's just not feasible. Salespeople are just not necessary for many day to day purchases, and the costs of a giant big box store don't work out.

Also, the information obtained from various online forums, reviews, websites and youtube could be more reliable and complete than from a salesperson. There are specialized products where a good salesperson can do wonders, but just not for much of retail.

Well I was picturing specialty retail and things like dealers, not really big box stores. I think big boxes are doomed, and I think we're better as a society for it.

> there are plenty of things I need to buy and will need to buy someday that I know nothing about, and would very much appreciate the expertise of a proper salesman

I can't think of ever feeling this need. I can't really remember needing a salesman for anything besides charging me.

Amazon has not operated at a loss since 2001. They've had positive free cash flow every year since then.

Apparently people (the investor class) are upset that a company has the audacity to the invest in itself rather than pay out dividends.

The absolute horror.

Most actual investors in Amazon were never upset by this. They bought with the full knowledge that Bezos was playing a long game.

They also fended off any sort of corporate raiders/vulture capitalists who could leverage a billion in debt, buy it out, take it private, then strip it of assets.

Growing tech companies have never really been expected to pump out dividends.

Microsoft didn't pay one until 2003, when it was 28 years old and sitting on $43 billion in cash (and then it declared an annual dividend totalling less than $1 billion).

nobody else? Uber loses like a billion / year with no clear strategy of how they'll make it up. I thought this was the maximum growth / user share strategy. Offer most value at a loss until they are locked in, but it is not clear how Uber will differentiate enough to retain this share when bleeding stops. Amazon seems to have had this figured out and nobody even came close no matter how much money they threw at it (see jet.com)

The “loss” was more akin to reinvesting margins for growth. The difference between this, and say Berkshire Hathaway, is how much of those investments were in to experiments.

Man, never did I think I'd see the day when people would get mad at rich shareholders for not demanding enough money for themselves.

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