Hi, I'm Ben Horowitz, and this is the A16Z podcast, and I'm here with Benedict Evans, who is going to

explain to us everything that we need to know about Amazon. Benedict, so people tend to be of two

minds about Amazon. On the one hand, there are people who say it's the greatest company in the world,

and Jeff Bezos is a genius, and you should put all your money in it.

And then there is another class of people who says it's basically a profitless Ponzi scheme

and will never be worth anything.

So why is that and who's right?

Well, I think if you look at the revenue and the profits

over the last 20 years, you can see both sides of that because the revenue is a curve that's

accelerating upwards as Jeff Bezos turns this into kind of Sears Roebuck of the 21st century

and converts more and more of retail to e-commerce. And then the net income line has been zero effectively for 15 or 20 years.

Like every now and then they accidentally make a profit when they forget to find something

to spend money on.

And so you see fertile ground for both of those.

I think the thing that you need to understand when you dig into the company, though,

is this isn't one – I mean, there's a couple of dynamics into the company though is this isn't one

I mean there's a couple of dynamics here the first is this isn't one business um Amazon is

dozens and dozens and dozens of separate business lines um the whole of physical media

you know the books and the DVDs and so on is less than a quarter of their revenue and so what

Amazon has been doing is creating new businesses over and over and over again,

funding them with the cash flow from the existing ones. And so you have this big mix. And some of

their businesses in that mix are old and profitable. And some of them are old and run at break-even

...