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To: Joe E. who wrote (306)	4/8/1999 7:48:00 AM
From: Chuzzlewit	Respond to of 419

Joe, you and I obviously have a bit of an insurance background (who else would know what a combined ratio is?). Of course there are both similarities and differences. The point that I was making is that e-tailing can sustain losses and grow cash simultaneously. But there will come a point of reckoning when growth slows. While interest generated is certainly a mitigating factor it will be insufficient because interest income is not of similar magnitude to insurance companies. This is due to the fact that differentials in cash flow timing is much greater with insurance companies than e-tailers. The model also differs from that of the insurance model because there is no uncertainty about the losses. Insurance companies include an expense item called IBNR (incurred but not reported) which is a front-end loaded expense based on statistical measures. But actual losses will depend on the experience of the insured. Here we have almost certain losses. Thanks for your thoughts on this issue. TTFN, CTC

To: Joe E. who wrote (306)	4/11/1999 3:46:00 PM
From: Dave Mansfield	Respond to of 419

BTW, this is exactly what insurance companies do, when they have a combined ratio of over 100. Nobody makes a big deal of them living off of the investment of premiums (sales), since it has been going on for centuries and is well understood and accepted in that context. Difference being time frame. An insurance company collects a premium which may not be paid back in claims for years and in the case of certain Workers' Compensation claims, decades. AMZN obviously does not have the use of money for quite so long. And do not AMZN's results include income from short term investments? Do they not continue to lose money even when factoring gains from such?