So their profitability as a percentage of revenue was actually drastically declining. All during a period where investors were grumbling that they should start giving the money back to investors. But Amazon was intentionally keeping their profits very low because they thought they had better things to spend the money on. This was not a myth, this was a strategy. A long-running one. See, among many articles: https://www.nytimes.com/2013/10/22/technology/sales-are-colo...
Man, break even means zero profit but also no losses. If EBITDA goes down or not is a different, and unrelated, question. And a different financial metric all together.
Amazon was, in its entire history as a public company, profitable in every single quarter, except 5 (!). So no, they never spend all their money on growth (they did spend a lot so but never in unsustainable ways, which is the key here). Using Amazon as an example to spend everything on growth, and profits will come, is fundamentally wrong.
I totally believe that a lot of startups are misusing the Amazon example. I also believe many of those startups will be royally screwed now that an era of easy money is ending. And personally, I'll be popping plenty of popcorn when they get their comeuppance.
But that doesn't mean I'm going to uncritically accept your claim that "Amazon was never profitable because they prioritized growth is a meme". Because it was basically true for a very long time. It was something many Amazon investors complained about long and loud because they wanted the cash, not future growth potential that they were skeptical of.
No? Because if you need tons of capital to make a minuscule profit your company is worth nothing. (A company has to outperform at least the interest people can get on bonds plus some equity premium.)
Amazon could make a significant profit, if Bezos wanted. But that’s a different question.
I see you've edited and added more, so let me also reply to this bit:
> That AWS is 10% or revenue and 90% of profits is not really impoetant
It's important if we're examining your claim that "Amazon was never profitable because they prioritized growth is a meme", because we're looking at the extent to which they reinvested gross profits from their core business.
Sometimes I am really puzzled by the lack of financial literacy on a forum aimed at start-ups. I really am.
Also the goal post moving. I said Amazon basically never reported losses, which they didn't. You said they barely broke even, which they didn't, as the numbers behind the chart show. And that Amazon prioritizes growth is hardly news. That they do so at the expense of profitablility is just plain wrong so. And the chart you shared yourself tells as much.
So their profitability as a percentage of revenue was actually drastically declining. All during a period where investors were grumbling that they should start giving the money back to investors. But Amazon was intentionally keeping their profits very low because they thought they had better things to spend the money on. This was not a myth, this was a strategy. A long-running one. See, among many articles: https://www.nytimes.com/2013/10/22/technology/sales-are-colo...