In the late 1990s, Amazon was rapidly growing yet consistently reporting losses, leading many to question its business model. Despite losing $125 million on $600 million in revenue in 1998, Amazon's stock surged, reflecting market confidence. Jeff Bezos, aware of internal metrics, knew they weren't losing money by selling goods below cost. Instead, Amazon had high fixed costs but maintained a positive contribution margin. Bezos recognized that achieving scale was key to profitability, prompting