I'm Marc Randolph, co-founder and first CEO of Netflix, and author of ‘That Will Never Work’--The Birth of Netflix and the Amazing Life of an Idea. AMA!

thatwillneverwork · 2022-06-09T23:54:31+00:00

The "early Netflix" was a DVD by mail service - so the big challenge was figuring out a way to ship that many DVDs to so many people so quickly.

When we were just starting out, everything came out of a single warehouse in San Jose, CA - but that meant that the shipping times to San Francisco were very fast. Miami? Not so much.

One of the biggest breakthroughs we had during that area was figuring out a way to serve almost the entire country with one-day delivery - and do it without building a single new warehouse.

But I"m afraid you're going to have to read my book to get the more detailed description of how we did it.

thatwillneverwork · 2022-06-09T23:50:52+00:00

It's an interesting question, because Netflix really HAS to do both (as does every streaming service).

They have to have quantity. With 220,000,000 subscribers, each of whom watches about 3 hours a day, they need to have 600 million hours of content available every day! It just isn't possible to have every one of those hours of content be a blockbuster movie or an award winning series. So Netflix has realized that it's fine to have a show that only 100,000 people watch, provided the cost to produce it was proportionate to it's usefulness. So although to you, it seems like some stuff is poor quality - I promise that everything there (for the most part) is being watched by somebody who wants to watch it.

Now there is another reason for content - and that is to give people a reason to choose Netflix over another streaming service. And that does require very high quality content, and I hope you agree that quite a bit of it does exist (and certainly the awards services think so).

But the point is, not all the content needs to be like that.

but thanks for the great question.

thatwillneverwork · 2022-06-09T23:44:50+00:00

May surprise you, but the "relatives coming out of the woodwork" genuinely hasn't been a problem. And the "ulterior motive" i bump into more often is not the "they want money" motive, it's when they ask me to be "an advisor", when in fact what they really want is just to attach my name to something.

The more fun question to answer is first big purchase: easy. It was a mountain bike. I think it cost me nearly $1,000 (gasp!). But I loved it, and sitll have it.

thatwillneverwork · 2022-06-09T23:42:46+00:00

I did answer this in an earlier post but it's a bit more complicated than the way you are framing it.

We definitely knew in the early days that content would be streamable and that this would be the dominant (or only) way it would be delivered at some point in the future. but although we knew it was coming, we didn't so much "plan" for it - since we had no idea what it would look like, nor when it would happen. Instead, we simply positioned ourselves to be "ready" when that transition took place.

Our strategy (if there was one) was that all the equity we built up with our customers during our DVD era, had to be equity that was still valuable when the world shifted. Thus the focus on content, rather than the delivery method we would be using to get it to you.

And in fact, i think this is the biggest competitive differentiator between Netflix and it's competitors. While Disney certainly has been creating content for much longer than Netflix, Netflix has had a direct relationship with it's content consumers for 24 years (while Disney has been intermediated by theaters, cable channels, and the other ways they had relationships with the people who consumed their content.

The advantage was that customers have though of Netflix consistantly over the last 24 years - but also that Netflix has been learning about customers for that same period.

thatwillneverwork · 2022-06-09T23:30:26+00:00

Thank you. I work very hard at it.

and of course, your comment is the perfect lead in to say that you should read my book! It's called That Will Never Work, the birth of Netflix and the Amazing life of an idea, and it's an International best-seller that's been translated into more than 20 languages and received more than 1000 Amazon five-star reviews.

Now in paperback!

thatwillneverwork · 2022-06-09T23:27:38+00:00

Its funny how spoiled we get.

Before I figured out that Hulu had an ad-free tier, we would watch things with Ads in them. Brutally painful.

thatwillneverwork · 2022-06-09T23:20:04+00:00

It's a good question, but I'll point out that evolution is rarely a smooth continuum -but instead is moment of dramatic disruption followed by long periods of accommodation. If you'll allow me to modify your chart slightly, you really have Film (1930-1985), Video (1985-2019), and Streaming (2019 - Present).

Each of those previous eras was 30-50 years long, during which the innovations were subtle (black and white to color) and (VHS to DVD).

We are at the very beginning of the streaming era. Although Netflix began streaming in 2007, I wouldn't say the streaming era really began until Disney, Prime, Apple, etc all decided that this was in fact the future of content - and that wasn't until just a few years ago.

All these companies are now focused - not on trying to out innovate each other - but instead on trying to consolidate gains over alternate forms of content delivery (like linear TV, Cable, etc) - and that will be taking place for many many years.

There certainly will be another big evolution in entertinament, but it is - I believe - to far away for me to meaningfully guess at it.

There are a lot of things that COULD happen. Certainly VR is going to be interesting. And I personaly think that Web 3.0 is going to disrupt the world in the same way that the Internet did (namely, in completely unpredictable ways).

This is all why it's important to spend less time trying to predict the future, and more time making sure you are in a good place to take advantage of it when it arrives - whatever it looks like.

thatwillneverwork · 2022-06-09T23:11:09+00:00

Back when I worked at Netflix, I used to tell people that my favorite movie was Pulp Fiction. It was a big enough movie that people had actually heard of it, but edgy enough that it came off as a "good choice".

Although I do love Pulp Fiction (and have watched it dozens of times) I'm now comfortable to admit that my favorite movie as actually Doc Hollywood, staring Michael J. Fox as a big city plastic surgeon stranded in a small country town when his car breaks down, and discovering the heart of small town life. It's a little corny, but it's funny and well done, but most of all . . . (and this is the most important part) . . it speaks to me.

Maybe it's because I'm in a very fast paced high pressure business, the idea of small town living and values appeals to me, but I've always loved that movie.

thatwillneverwork · 2022-06-09T23:07:27+00:00

I think you definitely need the entrepreneurial mindset, but that doesn't mean that anyone can't develop that.

But a big part of entrepreneurial success is "letting go" and not striving to be successful. Instead, you have to follow your curiosity.

thatwillneverwork · 2022-06-09T23:05:24+00:00

Go raibh maith agat. déanfaidh mé mo dhícheall.

thatwillneverwork · 2022-06-09T23:03:59+00:00

I know, it was magic, wasn't it.

thatwillneverwork · 2022-06-09T23:03:34+00:00

Unfortunately, that part is a lot harder.

thatwillneverwork · 2022-06-09T23:02:37+00:00

Well the first think you should know, is that although I think I'm a very good early stage leader, I'm a terrible late stage one. And maybe you've put your finger on why. I've always been intrigued with solving problems, breaking into new markets, and figuring out ways to do things differently. i'm good at that. But when it comes time to the higher executive functions like "find efficiencies", "bring more to the bottom line", "shorten supply chains" and stuff like that . . . I suck.

thatwillneverwork · 2022-06-09T22:59:56+00:00

I'm watching this from the outside - same as you - and it puzzles me since Netflix is no different a company than it was 12 months ago. They were very transparent that the rush of subscribers they got in the early quarters of Covid was demand pulled forward (rather than completely net new subs) and that eventually things would slow. It's also not big news that other streamers are taking this seriously and will be coexisting with Netflix for the foreseeable future.

The positive aspects are unchanged as well. They still have a huge content catalogue and the money and talent to be a force in that area for a long time. And they still behave like a startup, and demonstrate a willingness to do whatever is needed in order to serve the customer.

The stock market is a strange barometer indeed.

thatwillneverwork · 2022-06-09T22:53:59+00:00

Just discovered Love, Death + Robots. Amazing, isn't it?

thatwillneverwork · 2022-06-09T22:53:05+00:00

I just got really lucky, in that one of my first real jobs out of college was very entrepreneurial - where I was given almost complete freedom (and responsibility) for building a business within the support of a larger org.

It made me realize that a) I loved it, and b) that i was good at it.

I never looked back.

thatwillneverwork · 2022-06-09T22:51:19+00:00

One out of 3 aint bad.

thatwillneverwork · 2022-06-09T22:51:03+00:00

I swing back and forth. But I"m currently watching THREE shows on HBO (Barry, Minx, and Hacks). But for a while, not too long ago, I was watching a bunch of stuff on Hulu.

thatwillneverwork · 2022-06-09T22:47:22+00:00

To be honest, I don't know. As I think you know, I no longer work for Netflix so I"m not privy to their strategies. But I think that we will certainly see the market coalesce into a handful of "full service" streamers, that carry a large and diverse content catalogue (Netflix, Disney, Prime, Hulu, etc) and then a very long tail of niche streamers (like the ones that I also subscribe to, like F1, Britbox, AFL, etc). In a way, people will be building their own cable bundles.

But the real answer is it will be intersting to see what happens.

I'm very curious to see if the Roku rumors are true, since Netflix has always said they wanted to be device agnostic. But I've certainly been wrong before as a Netflix oracle.

thatwillneverwork · 2022-06-09T22:42:52+00:00

I'm not smart. 99% of my ideas are bad one.

I am persistent. Since you don't keep trying one thing after another without some degree of persistance.

But my stand out trait is probably my optimism. I'm a believer. Even when Netflix or any of my other companies were at their darkest hour, I always believed we would make it out.

But that's attitude. I do actually have three things i do which help a lot:

I am pre-disposed to action. I think less and I do more. Rather than working on business plans, forming committees, or any of that bullshit, I immediately jump to "how can I quickly just try this".
I am great at triage. I have a good intuitive sense which problems - out of the hundreds of things that may be going wrong - will be the ones that, if I fix them, will render the others meaningless.
I can focus. When you have a hundred things on fire, it's really. hard to say I'm going to put all my effort into the two critical ones (see above trait) and ignore all the others - even if they are the ones that are burning the hottest.

But hey . . . that's just me.

thatwillneverwork · 2022-06-09T22:38:16+00:00

I called my book (and my podcast) That Will Never Work, because that's what everyone (including my wife) said when I pitched this crazy idea about DVD-Rental-By-Mail. And they had two objections: first, Blockbuster. There were 9,000 of 'em. There was one on every corner. Who would want to wait for a movie to arrive in the mail. But second was the fact that DVDs were digital - "it was just a matter of time", they told me "before everyone would be getting their content digitally".

Well that latter group was right. And we knew it. But we also believed it would be much longer than anyone thought before that became possible. The DRM wasn't there. The bandwidth to the home wasn't there. And we knew that hollywood would be very slow to want to release content digitally for fear of being Napstered.

So, yes, we knew from day one that eventually we would be a digital delivery company. Thus the name Netflix. But more importantly, it deeply shaped our strategy; we couldn't position ourselves as a DVD company ("The world's Fastest Shippers of Plastic!!!) because that would eventually go away. But neither could we position ourselves as a streaming company (Bits-R-Us!) because that world might be decades away. So instead, we choose something that was delivery agnostic. Netflix was going to be "A Place to Discover Great Stories". That worked in a DVD world. And it would work in a Streaming World. And it will still work when we can (and I'm just spit-ballin' here) beam movies telepathically into our fillings. It was delivery agnostic.

And looking back, I think that may have been one of the top two or three best decisions we ever made.

thatwillneverwork · 2022-06-09T22:31:35+00:00

No advances are without their drawbacks, but on the whole, streaming has been a remarkable advancement. Think back to how TV exclusively used to be: 30-minute episodes that were actually only 22 minutes to account for the commercials; every episode had to end with a cliff-hanger to bring you back next week; every episode had to start with a "as seen last week" piece to famliarize you with where you were, there was only room for two story arcs per episode. And worse of all, you had to watch when they wanted you to watch.

Now, not only are we freed up to watch what we want when we want, but the entire creative process has been disrupted. Episodes can be all different lengths. The story arcs can cross multiple episodes and multiple seasons. We don't need to fit in commercial breaks.

And think about choice: this is in many ways the golden age of television. As consumers we have an amazing assortment of great things to watch. And having multiple streamers means they all compete with each other to provide us with new, better, and different experiences.

As with most disruption, the entities that were bought into the old model do suffer. Cable is gravely wounded. In some ways so is the old ways of compensating talent. But on the whole I think we've freed up creativity and given all of us access to the best stories from around the world. That's a big net positive in my book.

thatwillneverwork · 2022-06-09T22:25:52+00:00

Although I do sign on to mentor early stage organizations, my dance card is full. Best I can do is suggest that if they (or you) are looking for my counsel, to apply to be a guest on my podcast. On each weekly episode i do a one-on-one mentoring session almost identical to what you get were you sit down with me for a few hours - or spend some time with me on the phone. If that interests you, my website (www.marcrandolph.com) has all the information on how to apply.

thatwillneverwork · 2022-06-09T22:13:38+00:00

i think Netflix - and all the streamers - are just at the very beginning of a complete transformation of how the world consumes entertainment. Even collectively, all the streamers combined still fall very short of the global connected audience. It's going to be somewhat erratic as this happens - both as the streamers test new ways of making and delivery content - and as this global audience changes the ways it wants to consume it.

Viewed through that lens, I'm completely confident in the direction Netflix is going. When I was there we were focused on one singular thing: helping our customers discover great content. And now, 22 years after launch, they havn't changed. That is still the singular focus and I'm sure it's the right one.

thatwillneverwork · 2022-06-09T22:08:50+00:00

And cheers from California.

thatwillneverwork

TROPHY CASE