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

by Marc Randolph

As I mentioned earlier, Reed and I had assumed that the value of Netflix (which at that point was just two guys and an idea) was $3 million. So to keep the math easy, I decided that to start, there would be six million shares of Netflix stock, each worth fifty cents, and each representing a small fraction of ownership in the company. On day one, there were only two owners of the company—Reed and I—and we split it down the middle. Each of us received three million shares—or 50 percent of Netflix. Now, if nothing had happened since then, and I still owned 50 percent of Netflix, my world would be a little different. As I mentioned, Netflix is now worth about $150 billion. Owning half of that would be a nice piece of change. But then comes something called “dilution.”