Amazon has one of the most phenomenally dangerous vulnerabilities of any company I've ever seen. All it takes is a mildly critical look at how they fund their g

Amazon has one of the most phenomenally dangerous vulnerabilities of any company I've ever seen. All it takes is a mildly critical look at how they fund their growth. Amazon requires massive amounts of employees in order to grow. They throw increasingly-more-expensive new employees at increasingly-less-viable new businesses. These businesses are always massively cash-flow negative, and with the right amount of luck some of them might one day turn a profit. They fund this growth in three ways: 1) Issuing new shares of stock, 2) Paying employees with stock, and 3) Funneling cash flow from mature businesses back into the business. Because of accounting difficulties and not-so-explicit public reporting requirements, Amazon gets away with hiding how much they use #1 and #2, and can make people believe that #3 is the dominant source of funding. But the fact that they don't tell us how much #3 contributes is indicative of the fact that it doesn't; if you can't prove positive information, you hide negative information. Now here is the vulnerability: A moderate negative impact to their stock price sets off a chain of events that could destroy the company. The most critical employees holding the ship together are paid mostly via stock...with 2 year vesting times. As long as the stock prices keep growing, they overdeliver on compensation. But if stock prices fall, everybody gets a paycut. If the stock were to drop 50%, these employees would get a 25% pay cut. And they'll jump ship in massive numbers, as you would expect any time a company cuts pay by 25%. Without a cash reserve, all the potential remedies make the problem worse. Amazon could respond by offering more stock to employees. This lowers the stock price through dilution, and people rarely consider stock offers with falling prices to be an incentive. They could respond by selling more stock and making up for the pay in cash, but they would kill their stock price if they needed to sell enough to offset a 25% cut in pay. They could kill off unviable businesses that suck the most cash, but their stock price hinges on the existence of those unviable businesses to make investors believe there is growth potential. They could try to spin off businesses, but the high growth businesses prop their stock price up and the low growth businesses are worth less to the market than the value amazon receives from their cash flow. Everything they could possibly do will reinforce the drop of the stock price and flight of talent. In other words, Amazon can't just reset expectations and lay a few people off. They're sitting on a classic example of a runaway positive feedback loop[0]. Amazon knows it relies on stock speculation of growth potential to not die, that's the reason why you're reading this PR fluff right now. Amazon is the death star; the visible parts make it look like a tool for universal domination, but it's just a small torpedo blast away from nonexistence. [0] https://en.wikipedia.org/wiki/Positive_feedback https://en.wikipedia.org/wiki/Positive_feedback