That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea

by Marc Randolph

The whole saga had provided a valuable lesson: trust your gut, but also test it.

It took an additional test, with a truly outside-the-box execution, to understand what we’d already intuited to be true.

Also important here is the design of the experiment and the result measured. Looking at lagging indicators (retention) versus leading indicators (sign ups) and missing the unexpected finding that followed from the experiment. What mattered most was the first experiment, not because it was right or perfect not because it provided new information that led to the next experiment with the most valuable and unexpected finding.

Helping people find their favorite movies, movies they’d love, was our real goal at Netflix.

If we wanted any chance of surviving long-term, we had to convince customers that we were giving them something better than an online library and quick shipping.

Neither the technology nor the delivery method mattered. What counted

was seamlessly connecting our users with movies we ...

As my father used to tell me, sometimes the only way out is through.

“Getting to the top is optional. Getting down is mandatory.”

we had to start by looking backward, coming up with a list of what we could decide to stop doing.

Most times, deciding what not to do is harder than deciding what to do.

We’re okay with upsetting a thousand if it means we get it right for ten thousand.

Reid Hoffman of LinkedIn talks about this exactly, building for your next order of magnitude customers, even if it means losing a few already customers along the way. Especially important for early stage, can’t please everyone, cash is thin, focus on making your target customers need you!

no matter how passionate the argument, there was a shared expectation at Netflix that, once the self-evidently correct conclusion had been reached, it was time to fall in and implement it. Disagreement was collaborative, not ego-driven. It didn’t matter who was right—all that mattered was that we got it right.

The original crew of skilled generalists had been replaced with superstar specialists.

We knew digital delivery was the future. But how soon would that future arrive? And what form would it take? Would people download their movies, or stream them? Would they lean forward and watch on their computer or lean back and watch on their television? What kind of infrastructure would have to exist before the technology could be widely adopted? And what about the content? Did you start by focusing on a single genre, and if so, which one? And how did you convince the studios that their movies—once in digital form and so easily copied and shared—were safe in your hands? To answer these questions, I talked to

movie studios, television networks, software companies, and hardware manufacturers.

Here’s what I’ve learned: when it comes to making your dream a reality, one of the most powerful weapons at your disposal is dogged, bullheaded insistence. It pays to be the person who won’t take no for an answer, since in business, no doesn’t always mean no.

you and I both know that ‘success’ means a slightly different thing to VCs than it does to a company’s founders.” This is true, by the way. It’s something I tell startup founders all the time now. VCs will always say that they’re aligned with your mission, that they want what’s best for the company. But what they really want is what’s best for their investment in the company. Which isn’t always the same thing.

It’s when a storm comes up that all of a sudden it becomes apparent that people have different goals and objectives.

RANDOLPH’S RULES FOR SUCCESS Do at least 10% more than you are asked. Never, ever, to anybody present as fact opinions on things you don’t know. Takes great care and discipline. Be courteous and considerate always—

and down. Don’t knock, don’t complain—stick to constructive, serious criticism. Don’t be afraid to make decisions when you have the facts on which to make them. Quantify where possible. Be open-minded but skeptical. Be prompt.

As you get older, if you’re at all self-aware, you learn two important things about yourself: what you like, and what you’re good at. Anyone who gets to spend his day doing both of those things is a lucky man.

Reed’s oft-repeated origin story is branding at its finest, and I don’t begrudge him for it at all.

Is it a lie? No—it’s a story. And it’s a fantastic one.

It turns out that I did know what I like, and what I’m good at. And it wasn’t a company as big as Netflix. It was small companies struggling to find their way.

In true Netflix fashion, we hadn’t actually built an electronic interface for customers to use. Instead, we’d just employed our usual validation hacking—we built a miniature store inside the supermarket, where Netflix subscribers could pick from a selection of DVDs and return movies from their queue.

We weren’t testing whether or not a computer kiosk could work—we were testing how customers would use one.

Success is what you accomplish. It’s being in a position to do what you like, do what you do well, and pursue the things that are important to you.

“That will never work.”

(And to be fair to her, the idea as originally conceived wouldn’t have worked. It took years of adjustments, changes in strategy, new ideas, and plain old luck for us to land on a version of the idea that worked.)

By now, I hope you know what my answer to that line is. Nobody Knows Anything.

The most powerful step that anyone can take to turn their dreams into reality is a simple one: you just need to start.

You’ll learn more in one hour of doing something than in a lifetime of thinking about it.

You have to learn to love the problem, not the solution. That’s how you stay engaged when things take longer than you expected.

“Everyone who has taken a shower has had an idea,” he said. “But it’s the people who get out of the shower, towel off, and do something about it that make the difference.”