Amazon famously turned no profit for nearly 15 years. When you run a large business you can do things like reinvest what would have been profit into new projects. This is the whole point of a growth company.
Recognize that, simplistically, Profit = Revenue - Expenses, and that expenses is a dial which can be turned somewhat arbitrarily.
Amazon basically always had positive marginal revenue - unlike most of the startups.
People like to cite the one case where it worked and seem to be forgetting that most of Amazon’s profit comes from AWS. What are the chances that any of these startups are going to pivot to a competent different vertical to shore up their main business? That’s just like saying all you have to do is rehire the former CEO after a 10 year absence and become a trillion dollar company after almost going bankrupt.
And no Amazon did not use “excess capacity to jump start AWS”.
Recognize that, simplistically, Profit = Revenue - Expenses, and that expenses is a dial which can be turned somewhat arbitrarily.