Time is an overlooked competitive advantage

In the early days, Amazon was unprofitable.

They went public with meager profits.

Then, they were publicly ridiculed for not pushing more for profitability.

But, they ignored their critics and continued to play their own game.

The long game.

It wasn’t that Amazon couldn’t be profitable. They were willing to have profitable quarters when they needed to.

They chose to be unprofitable.

For long periods of time.

The biggest reason is their perspective was different.

Most companies will invest for a year and consider that long term.

Amazon invests in 10 years and considers that long term.

Which is why they seemingly had profitability issues on a quarterly basis.

But, as history would have it, when a company invests in 10 years while everyone else is investing in a quarter or 1 year, you win.

Amazon clearly has.

Time is a competitive advantage. Amazon knew this and their long-term investment horizon was strategic.

They beat out competitors.

They did it with free shipping. Hugely unprofitable in the short term.

Then, they did it with two-day shipping. Unprofitable in the short term.

Again, they did it with Prime. Profitability not a concern.

Years later, free, two-day shipping is a consumer expectation. They figured out how to win with it.

Now, all their competitors struggle with this expectation.

If Amazon had only looked at a 1-year return on any of these investments, they probably never would have continued. But, a 10-year investment makes them all work.

The only way you benefit from compound interest, is allowing time to do its thing.


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