The Weighted Average Cost of Capital (WACC)

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Bezos made a presentation at Amazon in 1999, advocating for exactly the strategy that they were running. It's really about the weighted average cost of capital, the WACC or WAC. If you have all the dollars from selling goods, not just the margin dollars, and you don't have to pay your suppliers for like a month after the customer bought it from you,. Or two months or three months or four months. That cash is effectively free for you to use. So if you have a competitor who's financing the growth with debt and you can do it purely with those profit dollars, well, you can beat them in the long term.

Amazon. No company has impacted the internet — and all of modern life — more than this one. We’ve waited seven years to do this episode, and are so, so excited to finally dive into every nook and cranny of this legendary company. And of course because we’re Acquired and this is Amazon, we couldn’t contain it all to just one episode… even a 4+ hour one! So today we focus on Amazon.com the retail business, and we’ll have another full episode on AWS coming soon. And because all great series are trilogies, to fully understand Amazon we highly recommend starting first with our previous episode on Walmart, which truly is the giant’s shoulder that Jeff Bezos stood upon. Let’s go!!

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