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Strategies & Market Trends : The New Economy and its Winners
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To: Les H who wrote (7155)5/24/2001 7:46:56 PM
From: craig crawford  Read Replies (1) of 57684
 
Heh. Precisely. The sad reality is AMZN was doomed from the get go because profitability and the maximizing of shareholder value were at odds with each other. I know that sounds ridiculous, you would think that shareholder value would closely track a clear defined path toward profitability as it does with most other companies.. But internet stocks were a different breed. If you ran an internet company and you tried to structure your company conservatively for profits instead of "share" at all costs, you would have been exiled by the markets to irrelevancy. Companies like AMZN focused the structure of their business on gaining share at any costs, no matter the price. The market rewarded this clearly poor strategy by driving AMZN to unheard of heights and so they were forced to remain on that path.

Apparently William has some kind of utopic vision of productivity at AMZN, which in actuality is just undercutting the competition by selling your commodity product at a loss There is nothing productive about consistently selling products at a loss. AMZN is the antithesis of productivity and creative destruction!

Gates was only trying to point out that if you have to abandon fundamental tenets of business like profitability to take share from your competitors, you have not accomplished anything creative and you certainly don't deserve to be valued more than them. To be valued more than your competitors, you have to create more value than they do. AMZN did nothing of the sort.
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