Comment by toyg | Hacker News Reader

Comment by toyg | Hacker News Reader

I think this sort of analysis misses three important elements:

1. Control. Absolute control over a huge chunk of worldwide B2B and B2C transactions is extremely valuable per se, in political and commercial terms. It's power that can be leveraged in a number of ways which are not necessarily reflected in the balance sheet. Bezos just bought the most influential newspaper in US political circles; this guy knows a thing or two about setting the agenda.

2. There is corporate profit and personal profit. Amazon employees are themselves turning quite a bit of personal profit. Does that make Amazon a No-Profit ? That's debatable. As someone else mentioned, pure profit is easy to tax, while "operating expenses" and share dealing can be shuffled around.

3. Industrialism. Many XIX-century industrialists saw their companies as agents of change as well as sources of profits. Amazon is pushing the envelop in commercial infrastructure (fully-automated warehouses, software-enhanced packaging, customer-seller variable relationships, etc etc) as well as creating whole new markets (AWS). As long as they don't start bleeding money, they're running a self-sustained engine of change, which is an achievement in itself.

You're right on with #2 there. Amazon has a carefully orchestrated spending machine that gobbles up all the available free cash flow (that would normally be profits) for the sake of expanding old business lines like the Prime video library or creating new ones like Amazon Supply. Or in many cases, by buying up market share like when Amazon picked up w00t. Or buying up their primary robot supplier, Kiva, so that they're the first ones to get all the cool new warehouse equipment and ensuring that their competitors are a generation behind.

If you think about it, self-financing out of profits is a smart way to go about this empire building. If it was financed on bonds or loans they'd be under pressure to "turn a profit" on the investments and they'd have to pay some nominal interest rate. Selling more shares to raise the money would dilute everyone and if part of the plan is to enrich people through share price appreciation, that's not the way to do it. Plus it's easier for share prices to continue to go up on hopes and dreams of a wildly profitable future than based on actual earnings. Once you get into that you have to balance growth against reported profits.

> If you think about it, self-financing out of profits is a smart way to go about this empire building.

Just a nitpick: they're financing out of surplus cashflow. Profit is what's left after everything else (including investment expenditure) has been subtracted from revenues.

It's always worth studying both the income and cashflow statements. They can tell you very different stories about a business. People are particularly fond of getting stuck on looking at the bottom line of the income statement, when most of the useful information is sprinkled around the rest of the accounting statements.

> corporate profit and personal profit

The Amazon's board have a fiduciary duty not to enrich themselves at the expense of their shareholders. Amazon certainly is not a non-profit.

Incentives tend trump all, especially in major grey territory like this.

It's not unheard of for a board to enrich themselves. I believe a lot of the salaries for boards and executives is nothing more than a looting of the company at the shareholders' and host country's expense.

Salaries for the board is a special case, since it usually needs to be agreed by the shareholders at the AGM. This case isn't really covered by fiduciary duty, since it is not a case of the board acting as agents of the shareholders (it would be different if the pay committee actually falsified their report).

People keep saying this. All it really prevents against is the most blatant kind of theft from the company; it doesn't stop senior management awarding themselves salaries that are huge compared to any other worker.

As I found your phrasing confusing, and to be clear for others, non-profit board-members also have a fiduciary duty to the stakeholders not to enrich themselves at the expense of the mission.

As much as I love my hometown paper, the Washington Post has never been the most influential newspaper in U.S. political circles except for a few brief years around Watergate. The NY Times and WSJ are far more influential today. And all newspapers pale before the power of 24 hour news channels.

The Washington Post is a damaged paper and damaged brand, which is why the Grahams sold it and why Bezos could afford to pay cash for it.

Reply on news.ycombinator.com