Feature

Are These People Really Worth $200 Million?

Wolff: That is the point that I'm making: Amazon doesn't make money.

Kurnit: But Michael, that's so unfair. That's so unfair! I mean, it's such a . . . there's a dozen different ways for Amazon to make money, some of them immediately and some of them longer-term. Amazon could make money today if it chose to, and then the question is how long would it sustain and would it grow? It could raise its prices today, and it would continue to do very well in the short term.

Suh: Time Warner doesn't make money. It hasn't made money in fifteen years. Time Warner hasn't made money in fifteen years.

Nisenholtz: It hasn't? Laughter

Wolff: It's Internet accounting. Amazon is a success. Time Warner is a failure.

Kurnit: But to return to the basic premise, that a lot of businesses invest in the early years to get the payback in the later years -- true or false?

Wolff: A lot of businesses invest against a plan that you can see.

Suh: The Amazon.com business plan says, "We will grow, and then we will make money." Not the other way around. Okay?

Kurnit: When you plant apple trees, do you get apples your first year?

Wolff: We can make the assumption: We have seen apples. But we haven't seen profits.

Suh: But what they're saying, though, is that they're investing in the future.

Kurnit: I'm told apples are a terrible business, actually.

Nisenholtz: These days it's much better.

Kurnit: Apples?

Nisenholtz: Apple.

Paternot: In the Internet's case, we're making a guess that at some point, 6 billion people will be online. I look at a People magazine, which is successful in the United States out of 250 million potential people. Every single country has its People magazine. Now, what would you pay to be the One Almighty Magazine that takes every single country? You'd spend probably maybe five to ten years unprofitable if you could capture every one.

Wolff: I guess you're bullish on the Internet.

Paternot: Otherwise, I'd be selling my stock.

Nisenholtz: Can you sell your stock?

Paternot: No. Laughter