attracts risk takers, and, as you might guess, has most of them.
Twenty-nine of the fifty wealthiest people on the planet live in the
United States, and two-thirds of unicorns (private companies with $1
billion–plus valuations) are headquartered here.^54 ,^55
Sell the Picks
Just as it’s better to own the land under a mine, it’s also good business
to sell picks to the miners. The California Gold Rush proved that was
true 170 years ago. Amazon proves it’s still true today. Amazon owns a
lucrative mine: the firm divides its revenue between retail sales of
consumer products (Amazon itself and Amazon Marketplace) and
“Other,” the group that holds ad sales from Amazon Media Group and
its cloud services (AWS).^56
Most e-commerce firms can never get to profitability and, at some
point, investors tire of a vision that’s “reheated Bezos.” The firm gets
sold (Gilt, Hautelook, Red Envelope) or shutters (Boo.com, Fab,
Style.com). A combination of a winner-take-all ecosystem, accelerating
customer acquisition, last-mile costs, and a generally inferior (online)
experience, makes pure-play e-commerce untenable.
Amazon doesn’t escape this fact. But even if Amazon’s core
business (pure-play e-commerce) is a difficult one for turning a profit,
the immense value Amazon has delivered to consumers has created
the most trusted, and reputable, consumer brand on the planet.^57 ,^58
Amazon has dominated e-commerce sales volume, but its business
model isn’t easily replicated or sustained. These days, it’s easy to
forget that Amazon did not turn its first profit until Q4 2001, seven
years after its founding,^59 and has dipped in and out of profitability
ever since. In the past few years, Amazon has traded on this brand
equity, leveraging it to extend into other businesses, and has expanded
into other, simply better (more profitable) businesses. Looking back,
Amazon’s retail platform just may have been the Trojan Horse that
established the relationships and brand later monetized with other
businesses.