Amazon’s Impressive Long-Term Growth
25 years ago, on July 16, 1995, an unheard-of company from Seattle launched a website immodestly claiming to be “earth’s biggest bookstore”. While that may have sounded a little presumptuous back then, two and half decades later said company, Amazon, is not only the biggest bookstore on earth but arguably the biggest store, period.
If there is one thing that Amazon’s founder and CEO Jeff Bezos is famous for, it’s his relentless focus on long-term growth. Having ignored critics for years, Bezos’ willingness to sacrifice short-term profits for long-term success has paid off big time, turning his company into a global powerhouse and making him the wealthiest man on the planet.
Not only has Amazon cemented its position as the leading online retailer in large parts of the world, it has also built an industry-leading cloud computing business, established itself as a major player in music and video streaming as well as in the booming smart speaker market.
The company has achieved all that by rigorously re-investing most of the money it makes. In each of the past two years, however, Amazon’s net income exceeded $10 billion, indicating that the company is now making more money than even Jeff Bezos with his notorious long-term vision can spend. Our chart below illustrates Amazon’s strategy by contrasting the company’s explosive revenue growth with its relatively modest profit growth.
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