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Chapter 6. Dumb Kids? > Amazon.com's Miracle

Amazon.com's Miracle

Amazon.com led the way. Jeff Bezos at Amazon.com pulled off a sort of miracle, violating all the prescriptions for how to build a company in his market context, and afterwards, everyone else wanted to do the same. They had all learned a wrong lesson—believing that Bezos had it right—especially the venture capitalists, who spread the misconceptions widely. They were quickly joined by investment bankers who were looking for firms to take to market. Venture capitalists pushed and investment bankers pulled entrepreneurs toward the public market much too fast, adapting Amazon's strategy to multiple settings. Only a handful of the entrepreneurs who adopted the advice were successful; while in pursuing the strategy other entrepreneurs spent great sums of money, and led late investors to a financial slaughter.

Bezos had adopted a strategy that shouldn't have worked, but because it was the early days of the Internet, he was able to pull it off for years. Essentially the strategy was one of prodigious spending to build wide brand recognition among the public, and to acquire market share without regard to profitability.


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