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

by Marc Randolph

It was special, and I knew it. Even then. Here’s an example. Te would ask each new hire what his or her favorite film was. Then, the day before our monthly company-wide meeting, she’d instruct the person to come to work the next day dressed as a character from that film.

Small, semi-improvised rituals like this kept things light. They reminded us that no matter how stressful the job was, at the end of the day we were renting movies to people. And nothing forces people to bond like shared embarrassment.

When you’re trying to build a product, sometimes it doesn’t matter how many promotions you run or how many deals you offer. Sometimes, you just need to get attention.

pied-à-terre.

She had that smile on her face that said she was excited to tell me what the problem was, and even more excited to tell me the clever way she had already solved it.

It was a big swing. And a big miss. But if you’re trying to make a dream into reality, you have to be willing to swing at a lot of pitches.

In the startup world, where the money is perilous and the timeline is unbelievably compressed, the day-to-day pursuit of your dream can appear frenzied—even manic—to outsiders.

Funny thing about those cartoons—they never end in capture. They’re about evasion, disappointment, near misses. You get the feeling that if Wile E. Coyote ever actually caught the Road Runner, he wouldn’t know what to do. But that’s not the point. The point is the pursuit of the impossible.

pratfalls

Indian summer

jettisoning

Maybe he thought we would have new numbers to go over at the end of the day. I made a note to myself to make sure I had up-to-date reports before he came back.

shit sandwich.

gallows

Reed didn’t have an ax to grind, or any ulterior motive. He was driven by what was best for the business, and he respected me too much to do anything else but tell the complete, unvarnished truth. He was just doing what we’d always done with each other.

They had never said it out loud, but it was probably obvious to everyone else in that room that the bold stroke, the dramatic and confident and intuitive leadership, was not going to come from me.

When your dream becomes a reality, it doesn’t just belong to you. It belongs to the people who helped you—your family, your friends, your co-workers. It belongs to the world.

If you hired the right people—smart, capable, trustworthy—they’ll figure out what needs to be done, and they’ll go ahead and do it.

I gave that engineer freedom to make a choice, but also reminded him of his responsibility to the team. I was radically honest with him—I doubted that he’d be able to keep up his end of the deal if he took off early for San Diego every week—but ultimately I left it up to him.

People who have the judgment to make decisions responsibly love having the freedom to do so.

If you fill your company with people who lack good judgment, then you have to build all kinds of guardrails to keep them in line.

Unlimited vacation days and hassle-free expense reimbursement are almost clichés now. But they were groundbreaking at the time.

baroque

pungent,

détente

crestfallen,

peregrinations

If people want what you have, they will break down your door, leap over broken links, and beg you for more. If they don’t want what you’ve got, changing the color palette won’t make a damn bit of difference.

Overplanning and overdesigning is often just overthinking—or just plain old procrastination.

When it comes to ideas, it’s more efficient to test ten bad ones than spend days trying to come up with something perfect.

No one was more surprised than me. Not only had I fought against taking the risk of testing all three of our ideas simultaneously, but this was perhaps the least likely solution I could ever have imagined.

William Goldman,

Nobody. Knows. Anything.

Heaven’s Gate,

If Nobody Knows Anything, then you have to trust yourself. You have to test yourself. And you have to be willing to fail.

The subscription model saved Netflix and quickly came to define it. But it wasn’t something that we thought our way toward—it wasn’t something anyone could have predicted ahead of time. It took a lot of hard work, a lot of hard thought.

“negative option”—that

Should we focus all our effort and resources on the program that might save us, or try to offer both models simultaneously?

But in 1999, we were doing something that no one had done before: we were convincing people to pay for potential.

Marquee drove up our site traffic by 300 percent.

Canada Principle.

First, we knew that it was inevitably going to be more complicated than it looked. Because French is the main language spoken in some parts of Canada, we would have translation headaches. Canadians use a different currency, which would have complicated our pricing—and the fact that Canada also calls that currency a “dollar” threatened to be a communications nightmare. Postage was different, too, so we would have had to use different envelopes. In other words, even something seemingly simple was bound to be a pain in the ass.

The trouble with including Canada and expanding

Plus, as with DVD sales, we were confusing customers, giving them too many options.

Focus. It’s an entrepreneur’s secret weapon. Again and again in the Netflix story—dropping DVD sales, dropping à la carte rentals, and eventually dropping many members of the original Netflix team—we had to be willing to abandon parts of the past in service of the future. Sometimes, focus this intense looks like ruthlessness—and it is, a little bit. But it’s more than that. It’s something akin to courage.

one fell swoop

“They’re probably just used to it,” he said. “They know we’re across the country and probably just assume things will take longer for them. We might be dodging a bullet here. If we don’t have to build warehouses all over the country to facilitate overnight shipping, we’ll save a lot of money.”

intuit

The longer we ran the test, the more apparent it was that next-day delivery was a real game changer—just not in the ways we thought. It didn’t affect retention—it affected sign-ups.

The whole saga had provided a valuable lesson: trust your gut, but also test it. Before you do anything concrete, the data has to agree.

Doc Hollywood,