Amazon and the “profitless business model” fallacy

A thorough and delightfully insightful look at the Amazon business model (of returning nearly all profits back into growth and future projects), by an ex-Amazon employee. The profitless model is often cited in article, such as this one recently in the NY Times. Bezos has a very clear idea of what Amazon should be doing, as it ruthlessly dominates an increasing number of markets.

What a wonderful feeling, to be able to conceal a secret in plain sight. Laid bare before its competitors, its investors, the press, is the recipe and the blueprint, in plain language. I agree with Thompson and others that it is increasingly difficult to find real business moats or competitive advantages in the modern world, what with the internet eliminating many previous physical moats of time and space. What remains , though, is a footrace of beautiful simplicity, one in which Amazon is both tortoise and hare. It is patient, it plays for the long-term like no other company, it will take failure after failure and never lose heart, and yet it will sprint when it picks up a scent.

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