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Netflix Co-Founder Marc Randolph Shares Stories of Crucial Decisions

Amazon's Jeff Bezos bid was in the low eight figures — not bad for a startup just two months out from launching and bleeding out. Still, the founders' decision not to sell was easy.

Difficult was the call to shift away from the part of the business that generated 99% of its revenue:in the future, Netflix would focus on DVD rentals. No need to sell them anymore. Amazingly, CEO Marc Randolph only needed a few minutes to convince co-founder Reed Hastings to go all-in.

"If there's one idea I'm most proud of, it's this one," says Randolph. "Doubled up doesn't seem practical, but I thought it would increase our chances of finding the right rental idea." »

Perhaps that first pivot even made Netflix's later decision to turn to digital streaming all the easier. While it was by no means an overnight success, as many might assume over 20 years ago, Netflix has become one of the most influential companies of our time. Yet Randolph, who served as CEO for nearly two years and left the company in 2002, has been mostly forgotten by history. He calls himself “the Steve Wozniak of Netflix”, without any bitterness.

His eye-opening book, It Will Never Work:The Birth of Netflix and the Incredible Life of an Idea, hits shelves in September. It serves as a story in the trenches of the early years, when on more than one occasion a breakup decision could have led to Netflix's obituary.

The title of the book represents the four words Randolph heard often, even from his own wife, during the formative years. His brainchild of renting VHS tapes wouldn't have worked — too expensive and too much risk of damage in the mail. The DVD release schedule has been one of the company's favored breaks en route to over 150 million current customers.


“If only they could have seen our first little office — a dirty green carpet, we're all sitting on beach chairs. We've overcome so much adversity and I think that's what I wanted to share in the book, the story of how we became Netflix. "


In the years following Randolph's exit, Hastings flourished as the company's CEO. The two remain friends.

"I'm proud of the courage and insight it took to walk away," Randolph says. “Reed was and is better than me as a CEO. We have compromised remarkably well and I am proud of it. It's more important than who gets the credit. »

That will never work is less a textbook on startup success and more a fun memory trail, featuring Randolph's favorite stories. It includes the one from 1998, during the Bill Clinton/Monica Lewinsky scandal. Netflix sold out copies of Clinton's four-hour depot, and the fiasco of shipping the DVDs quickly was chaotic. The promotion attracted over 5,000 new customers and a ton of free national press coverage. But somehow the DVD reels didn't have Clinton's testimony. In its place was a rather raunchy adult movie. The company sent a letter to everyone who purchased the video and offered to trade it at Netflix's expense.

" But you know? Funny thing. Not a single person,” Randolph writes.

The most surreal story in the book takes place at the offices of Blockbuster in 2000. The movie rental giant has called for an investigation into Netflix's net purchase. But Hastings and Randolph literally laughed at the $50 million they were asking for. Of course, Blockbuster, once ubiquitous in malls across the country, is now nearly closed.

Having been one of the brave and nimble upstarts, Randolph wasn't surprised to see Blockbuster on the wrong side of a catastrophic disruption.

“All established businesses struggle with this,” he says. “We were tiny, making $5 million in revenue for their $6 billion. We spoke with them several times on the road, and they always said no. »

Prior to leaving the company in 2002, shortly after Netflix's release, Randolph's final assignment was a three-month project testing a movie rental kiosk with Mitch Lowe. Hastings passed on the idea that Lowe later turned into Redbox. Since then, the 61-year-old Randolph, who has cashed in the majority of his stock, has served on several boards, mentored many young entrepreneurs, and started a few other businesses.

"Everyone sees this giant corporation now," he says. “If only they could have seen our first little office — a dirty green rug, we're all sitting on beach chairs. We've overcome so much adversity and I think that's what I wanted to share in the book, the story of how we became Netflix. "