Amazon makes for an interesting business model (and business arc) case study. Yes, Mr. Bezos is incredibly wealthy (on paper, as some would say). But even today - 20 years in for Amazon - most of that wealth (i.e. the market value of the AMZN stock he holds) is still based on the expectation that someday he (or someone) will be able to leverage Amazon's market positions such that it will be able to make a lot of money. Up until now the company has, for the most part, been focusing its efforts and resources on establishing a presence in a bunch of different markets and a dominant position in certain markets. And, again, this is 20 years in.
Broad strokes: Amazon lost something like $3 billion in its first 8 years. Then it reached profitability and over the next 9 years made about $5 billion. That brings us through 2011. Since then it hasn't made money. (To be clear, it made a little money in 2013, but less than it lost in 2012 and 2014 such that it actually lost a tiny bit of money over that three year period. Also, there are a lot of pieces to the net income puzzle with a company like this, what I'm referring to is Amazon's reported GAAP income based on standard accounting methods. If you choose to include or not include certain things (e.g. stock-based employee compensation), you can get different results.)
It's again largely using its resources and focusing its efforts on establishing market positions. In some contexts it essentially gives stuff away - perhaps even at loses - in order to establish certain aspects of its businesses, increase marketshare, or garner mindshare. It is, presumably (at least in the hopes of shareholders), setting itself up to be dominant (or in some areas maybe just relevant) in the future so that it can make big money. As one example, for a long time it tried to establish both monopolistic and monopsonistic power in book sales. It did things not so much to make money (right then) but to make itself the only meaningful player when it came to both selling books to consumers and buying books from publishers (or otherwise from content creators). To some extent it was successful on that front, but perhaps not to the extent it hoped to be. Once it gets in such a position of power it has a lot of options as to how it can use that power to generate strong earnings.
Amazon reports fourth quarter (and full year) earnings this afternoon. If it reports more or less what it's expected to, it will have returned to making money for 2015 - something like $900 million for the year. That's nothing to sneeze at, but it's a comparably small amount for a company with its market cap and for a business that is as dominant as it is in some areas (and that has a presence in so many other areas).
Those earnings for 2015 would mean that it's made something like $3 billion over its 20 years of existence (that's accounting for the money it lost in a lot of those years). Again, that's nothing to sneeze at. But compare it to a company like Facebook which made more than that ($3.7 billion) in just this past year. It reached profitability pretty early on and in less than 10 years has made something like $9 billion. (Again, we're talking about GAAP earnings, Non-GAAP earnings would be quite different - more like $6.5 billion in just this past year.) It's already delivering on its (unspoken) promise to someday start making a lot of money.
Amazon may well deliver on that promise too, it may even do so soon. But it hasn't really done so yet. Heretofore it's just been setting itself up to rule the world. It's done fairly well on that front. And as we all can likely imagine, if you rule the world it shouldn't be that difficult to figure out a way to make a few tens or hundreds of billions of dollars.
At any rate... Good on Mr. Bezos, I wish him (more) success. And for his shareholders' sake I hope Amazon starts making considerably more money sometime soon. The promise of future bonanzas can only hold a stocks' price at such lofty levels for so long. I think.
