Success Through Disruption: A Discussion With Netflix Co-Founder Marc Randolph

Success Through Disruption: A Discussion With Netflix Co-Founder Marc Randolph
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Recently, I had the honor to meet with Marc Randolph, Co-Founder and Former CEO of Netflix, in Nashville. He talked about Netflix’s early days and the steps they took to become successful, starting with a critical meeting at the headquarters of a large corporation in Texas.

“We make the pitch that we will join forces: We’ll run the online business, and they’ll run the stores,” he said.

Working with Netflix? To me, that sounds like a dream deal. Unfortunately, this was 1999 and the company they were pitching to was about to laugh them out of the office after asking how much it would take to acquire Randolph’s company.

After asking for $50 million, the meeting went “downhill immediately,” as they were pretty much laughed out of the office.

“I remember sitting there with my head down thinking, ‘Now we’ve got to kick their ***.’”
They eventually did. Blockbuster didn’t fully grasp the impact the Internet and Video on Demand would have in the coming decade.

When’s the last time you saw a Blockbuster?

“It’s the tragedy of disruption,” he said. “The lesson for companies of any size is, if you’re not willing to disrupt yourself; if you’re not willing to keep moving forward, you’re leaving it wide open for someone to disrupt your business for you.”

Randolph noted that while none of them had any “experience whatsoever in the video business,” the fact that they took down Blockbuster can be attributed to two things: Ideas and Risks.

“I don’t mean scary, dangerous risk,” he said. “I mean the risk-taking that comes from starting down the trail but not being able to see what’s around the corner.”

When we wait and use data and analytics to see where our industries are going, we’re beaten by those who took the risk first.

Randolph stressed that as businesspeople, we don’t have to take risks blindly. Instead, he said that the ultimate compass is an “Idea.”

“If you don’t know that good idea versus a bad idea, you have to take the risk.” They started testing concepts, including putting more energy into rental-by-mail. Of course, that’s what eventually gave them their big break.

Randolph left the company in 2002. By the end of the decade, Netflix had pivoted again, taking an even higher risk: becoming an on-demand streaming service. Now one of the largest online media companies, they would never have gotten here is they didn’t take the risks to test the bad ideas as well as the good.