The Amazon model, at least currently, is to go for market share. Forget profits. Encouraged by the seeming success of Amazon founder Jeff Bezos in building his empire, entrepreneurs have been doing likewise. That might prove to be the road to ruin.
The Amazon model got investors concerned when Q2 2014 numbers came out. The company lost $127 million, versus $7 million in Q2 2013. The price of the stock plunged about 10%, so far. Here is coverage from Fortune.
Wall Street had anticipated a lot less than the 27-cents a share loss. Its confidence shaken in the stock can trigger plenty of model-questioning among those running their own businesses.
One thing hasn't changed. And that's the need for the enterprise to eventually make a profit. Even the IRS imposes that reality.
Sure, businesses need to be expanded. Sure, entrepreneurs have to try out new things. But if the enterprise isn't heading into the profitability zone, perhaps its founders should do a deep dive into its guts and search for where profits can be made.