Amazon has had more access to cheaper capital for a longer period than any firm in modern times. Most successful VC-backed tech companies in the nineties raised less than $50 million before showing a return to investors. By comparison, Amazon raised $2.1 billion in investors’ money before the company (sort of) broke even.46 As the company has shown, Amazon can launch a phone, invest tens, maybe hundreds, of millions of dollars on development and marketing, have it fail within the first thirty days, and then treat the whole disaster as a speed bump. Now that is patient capital. If any other
Amazon has had more access to cheaper capital for a longer period than any firm in modern times. Most successful VC-backed tech companies in the nineties raised less than $50 million before showing a return to investors. By comparison, Amazon raised $2.1 billion in investors’ money before the company (sort of) broke even.46 As the company has shown, Amazon can launch a phone, invest tens, maybe hundreds, of millions of dollars on development and marketing, have it fail within the first thirty days, and then treat the whole disaster as a speed bump. Now that is patient capital. If any other Fortune 500 company—be it HP, Unilever, or Microsoft—launched a phone that proved DOA, their stock would be off 20 percent plus, as Amazon’s stock was in 2014.47 But as shareholders screamed, the CEO of another company would blink and pull in its horns. Not Amazon. Why? Because if you have enough chips and can play until sunrise, you’ll eventually get blackjack. This cuts to Amazon’s core competence: storytelling. Through storytelling, outlining a huge vision, Amazon has reshaped the relationship between company and shareholder. The story is told via media outlets, especially those covering business and tech. Many of them have decided tech CEOs are the new celebrities, and they give Amazon the spotlight, center stage, and star billing anytime. Until now, the contract companies have with shareholders is: give us a few years and tens of millions of dollars . . . and then we’ll begin return...
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