Well, if you really want to be ''concerned'' about the levels of some of these profitless Internet stocks, such as Amazon.com, you should pay less attention to Mr. Greenspan and more attention to what's going on in a small house in Cedar Falls, Iowa.Luckily, in 1999. I was a satisfied Amazon author, and a satisfied Amazon customer. So I bought some Amazon.com stock. This was contrary to Friedman's advice:
There, a single Iowa family, headed by Lyle Bowlin, is re-creating Amazon.com in a spare bedroom. I tell you this not because they're an immediate threat to Amazon.com, but to underscore just how easy it is to compete against Amazon.com, and why therefore I'm dubious that Amazon and many other Internet retailers will ever generate the huge profits that their stock prices suggest.
Because his profit margins are razor-thin, Mr. Bowlin, like Amazon, needs repeat buyers. Amazon gets them by offering useful information about books. Mr. Bowlin does it by offering any government-certified nonprofit organization a donation of 10 percent of the purchase price of any book that any nonprofit or its members buy through him.I was among those who posted comments on the NY Times website taking issue with Friedman's analysis. He had so many complaints that the Times published a follow-up on March 9, 1999:
So the next time your broker tells you that this or that Internet retailing stock is actually worth some crazy multiples, just think for a moment about how many Lyle Bowlins there already are out there, and how many more there will be, to eat away at the profit margins of whatever Internet retailer you can imagine. It only costs them $150 a month and they can do it as a hobby!
Or think about it like this: For about the cost of one share of Amazon.com, you can be Amazon.com.
I recently wrote a column about Lyle Bowlin, who, for about $150 a month, had managed to put together a Web site that could compete with Amazon.com for selling books. Mr. Bowlin was underselling Ama zon.com (and making a profit!) while running the whole operation out of a spare bedroom in his home in Cedar Falls, Iowa. Well, the column elicited the usual range of skeptical responses from experts, who argued that Mr. Bowlin's operation was just a fluke, or that he wasn't calculating his costs properly, or that Amazon.com would soon crush him and all other would-be little-guy competitors.Lyle Bowlin's internet bookshop, hyped by Friedman (reportedly a family relation of some kind) went out of business. But Amazon didn't. It's trading today at $179 per share. Amazon not only dominates the book business, it is a major player in the rapidly growing cloud computing field. Amazon is currently valued at approximately $80 billion.
Well, to all of you I say: YOU'RE WRONG.
One title you won't see on a Thomas Friedman book, I imagine: Money Talks, B.S. Walks.