We are proud to feature an inspiring interview with Marc Randolph, co-founder and first CEO of Netflix.
Marc is a veteran Silicon Valley entrepreneur, who’s founded or co-founded six other successful startups, mentored hundreds of early stage entrepreneurs, and as an investor has helped seed dozens of successful tech ventures.
“What Will Never Work: The birth of Netflix and the amazing life of an idea” is his recently released book.
In our conversation, Marc shares some challenges of Netflix early days, his experience of 40+ years in tech and his most frequent advice to entrepreneurs.
BayBrazil: Netflix started as a DVD rental and sales platform startup when streaming did not exist. How was the evolution of the ideas and business model changes in a running company?
Marc: You do what has to be done. Most people are scared to change what they are doing; scared to walk away from something that is working. But customers don’t care about the past – they only care about the future. Sometimes doing what is right for the future will end up disrupting the past, but you have to have the courage to walk away from that – even if it means walking away from most of your customers, most of your revenue, and all the things that you used to be able to do to be successful.
BayBrazil: What was the biggest challenge to pitch Netflix to investors at an early stage? Could you share lessons learned along the way?
Marc: Every person we pitched said the same thing: That Will Never work. And they all had the same two complaints. First, that a DVD-by-mail company would never work because why would someone wait two or three days for a disc when there was a Blockbuster on every corner. And second, because (they thought) it was just a matter of time before everyone was downloading or streaming movies. And then what happens to shipping DVDS?
What we learned was that when you face disruption at some point in the future, you have to build a company that does two things: works NOW (which you’re waiting for the disruption) but allows you to build equity and brand that still has value in the future.
In our case we didn’t position the company as “the world’s fastest shipper of plastic” (which would have become obsolete with the advent of streaming) but neither did we position it as “the best way to stream movies (which wouldn’t have been valid for many many years). Instead, we chose to position ourselves as the “The Best Place to Find Movies you Love” which worked then (when it was a DVD world) but also works now (with streaming) but will also work in the future (regardless of how we choose to get movies).
BayBrazil: Netflix was the sixth company you founded and, since you left the company, you became a mentor of early-stage startups. Based on your experience, do you think entrepreneurs face the same problems in different startups? Is there common advice you always repeat for them?
Marc: Absolutely. People make the same mistakes over and over again. The two biggest problems are: 1) failure to start. They keep their ideas in their heads for too long, so they never learn what is wrong. And 2) lack of focus. They try to do too many things well. Startups are hard and there are usually hundreds of things that are broken and on fire. The real skill is to pick the one or two things that if you get them right, they will make everything else obsolete. And then you have to focus obsessively on them and on nothing else.
BayBrazil: What was the best decision you did in the beginning that most helped Netflix to become the biggest media company?
Marc: There were two. One was the position we did around finding movies you love (rather than being all about the delivery part of it). The other was making room in the company for Reed Hastings to join me.
BayBrazil: The streaming market will soon have new players, including Apple. When it comes to emerging markets like Brazil can Netflix lose subscribers to the entrants?
Marc: Sure, but the market is expanding much faster than the rate at which Netflix will lose subscribers. At the prices we’re seeing for the streaming services, there is room for many players in the market.
BayBrazil: “That Will Never Work ” has just been launched, telling us the early days of Netflix. What was the best thing about writing this book?
Marc: Those first four or five years at Netflix were exciting, stressful, funny, challenging, and scary. It was great being able to go back and explore exactly what happened, to talk to the other people who were there. To hear their stories. I wanted That Will Never Work to be the untold story of Netflix, but I also wanted to share with people all the tips, tricks, and secrets I’ve learned over my 40 years as an entrepreneur. I hope that I have been able to do so.