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Show Notes:

• Amazon's financial strategy and cash flow. 0:00

  • Amazon (2004) prioritizes free cash flow per share over earnings growth.

• Transportation machine's profitability. 1:30

  • Entrepreneur invents $160M transportation machine, earns $10M in year one.

• Income statements vs. cash flows in business valuation. 2:31

  • Income statement shows 100% compound earnings growth, but cash flow statements reveal negative cumulative free cash flow of $530 million.

• Cash flow and growth in a business. 4:02

  • The business's slow growth is actually beneficial, but investors would still find it unviable due to cash flow issues.

• Amazon's financial performance and shareholder value. 5:30

  • Amazon prioritizes free cash flow by improving customer experience and maintaining a lean cost structure, resulting in a 38% increase in free cash flow to $477 million in 2004.

  • Amazon has efficiently managed its share count by repaying convertible debt and eliminating potential future dilution, resulting in more cash flow per share and long-term value for owners.