Thread by @JonErlichman

Recent struggles for tech businesses are compared to the dot com bust.

While that collapse led to many company failures…

…Amazon was not one of them.

Here are 4 reasons why… 🧵

1: The stock price is not the company.

Amazon’s stock price declined nearly 95% from its peak.

Jeff Bezos started his investor letter in 2000 with a single word: “ouch.”

But he also explained that despite the stock’s drop, the company was doing well.

Here’s Bezos explaining why he felt confident in the business, despite the stock drop:

2: Cash is king.

Bezos felt Amazon could ride out the storm because it had enough cash.

In early 2000, Amazon completed a timely sale of convertible bonds to European investors.

That deal may have saved Amazon, according to Brad Stone’s book, The Everything Store.

3: Know when to cut your losses.

Amazon had invested in e-commerce companies to expand beyond books.

Some would not survive.  So Amazon walked away.

“As painful as that was…investing more of our capital in these companies…would have been an even bigger mistake,” Bezos wrote.

4: Keep an eye on the future.

When the NASDAQ bottomed out in 2002, Amazon was already thinking ahead.

Over 5 years, it rolled out:

*Amazon Prime (2005)
*Amazon Web Services (2006)
*the Kindle (2007)

“The big winners pay for thousands of failed experiments,” Bezos has said.

You can read more here:
jonerlichman.substack.com