Re: [Wash Post] Amazon.Com Buys 2 Online Start-Ups.

Gregory Alan Bolcer (
Thu, 06 Aug 1998 09:03:50 -0700

> I'm perplexed by this. I'm not market savvy, nor business savvy (nor
> any kind of savvy, really). :-) Yet, it seems like Amazon is the
> ultimate in a low-overhead, high-volume business. They run a bunch of
> web servers, and employ hourly laborers to pack books into boxes for
> shipment. How can that *not* be profitable? I just don't get it...

It's like the cable companies. They are in growth mode. Cable
companeies spent billions and billions upping their infrastructure and
it's just now starting to pay off. If you have a business model that
says with $5 million now you can be running $50 million a quarter
profits in 5 years, you backfeed captial. So you might put $45
million in up front. Where do you get the extra money? You
generate debt. This is an excellent business model as long as
you can gurantee your stability over the course of the projection.
If you have to change your business model in the middle, you are
screwed. So far, their business plan execution appears to
be running just fine.

Birds and bushes. If you actually look at the game theoretic principle,
people will behave that way. If you could have $1 in your pocket or one
in a million chance to win a million dollars, many people will take that
chance. Now start playing with the odds, Amazon's got a pretty good