# What famous company that turned a loss at its first year(s) but then became profitable? [closed]

In a discussion with a friend, he mentioned that a new company may fail to gain profits for several years before it becomes profitable. I asked him for examples but he did not know any. I though of Amazon, but I think they made "some" profit in their first year. Could you please tell me What famous company name that turned a loss at its first year(s) but then became profitable? It would be great if you have an easy reference for me to refer to. I am not in financial business.

• I'm voting to close this question as off-topic because it is about trivia, not economics. – Giskard Mar 21 '18 at 22:17
• @NoChance, it is very common to have a loss (i.e. expences > revenue) in the first year. Amazon would be a safe bet: they started in 1994, probably had huge expenditures on IT, and launched the website in 1995. It’s hard to be specific in such cases because the financial statements of starting companies usually are not public. – Pawel Kam Mar 22 '18 at 1:37
• revenuesandprofits.com/… – Giskard Mar 22 '18 at 6:39
• @PawelKam, good answer, if you post it as an answer I will mark it as such. Thank you. – NoChance Mar 22 '18 at 12:35

It is very common for a company to have a loss (i.e. expenses > revenue) in the first year. Amazon is actually a very good example of that. It’s also a good example of ‘growth before profit’ strategy.

Amazon was incorporated on July 5, 1994, and begun service in July 1995. This means that not only it did not generate profit in its first year, there were also no sales. Even after the launch the company generated loss:

Amazon had stated from the outset that it did not expect to turn a profit for four to five years, and it duly delivered on its promise. The firm grew quickly but failed to generate profit, making a net loss of USD -303,000 on net sales of USD 511,000 during its first six months of trading. At the beginning of 1996, Amazon employed eleven people and moved out of Bezos’s home to a small warehouse nearby. By the end of the year, Amazon.com offered 2.5m titles online, although it still carried only a minimal inventory. By this point, the firm had 151 employees and relocated once again to accommodate its growing workforce. Sales for 1996 were USD 15.7m, with the company making a net loss of USD 5.7m.

Please see below historic results from Amazon’s first public annual report from 1997 (the year of IPO):

                           1997 |   1996  | 1995|   5 Jul 1994 - 31 Dec 1994

(1) net sales            147758 |   15746 | 511 |   0
(2) cost of sales        118945 |   12287 | 409 |   0
(1+2) gross profit        28813 |    3459 | 102 |   0
---       ---   ---     --
(4) total operating
expenses                  58022 |    9438 | 406 |   52
(5) profit from interest   1619 |     202 |   1 |   0
---       ---   ---     --
(1+2+5-4) net loss        27590 |   5777 |  303 |   52


As for an easy reference, @denesp cited an interesting source on this. There are some slight differences in the data, so I thought I would cite it alongside with annual report data, which is more precise.