Item — HN Reader

There is a secret sauce: pairing a company (Amazon.com) with heavy net operating losses (NoLs) with a very profitable company (AWS).

The result? Amazon pays zero taxes and can continually expand. The NoLs offset the profits, and every time Amazon has a division that becomes profitable they offset it by entering a promising but loss-inducing new sector. Then, when that division becomes profitable - rinse and repeat.

This is Bezos’ genius.

2 comments

> This is Bezos’ genius.

His genius is gaming a readily game-able tax system for personal gain and public loss?

I do agree it's what he's good at, but I disagree about it being "genius" and question whether it's worthy of praise.

Concurred.

Are taxes such a serious constraint on company growth when funding is so easily available ?

Hm. Not sure, that’s an excellent point. It may not be a constraint, but I think it is a massive incentive.