Ben Williams

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

By Marc Randolph

2. “That Will Never Work”

What I needed was the feeling of being deeply engaged with a project. What I needed was purpose. Hence the ideas for a new company. Hence personalized shampoo by mail.
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“Sure. But you want something that will scale,” he said. “You want something where the effort it takes to sell a dozen is identical to the effort it takes to sell just one. And while you’re at it, try and find something that’s more than just a onetime sale, so that once you’ve found a customer, you’ll be able to sell to them over and over again.”
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3. Please, Mr. Postman

The studios had learned from that mistake, and they wanted DVDs to be like CDs: collectible consumer products.
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When you start a company, what you’re really doing is getting other people to latch on to an idea. You have to convince your future employees, investors, business partners, and board members that your idea is worth spending money, reputation, and time on. Nowadays, you do that by validating your product ahead of time. You build a website or a prototype, you create the product, you measure traffic or early sales—all so that when you go to potential investors, palm outstretched, you have numbers to prove that what you’re trying to do isn’t just a good idea, but already exists and works.
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4. Getting the Band Together

I’m usually wary of title inflation—although it’s something that seems like it costs you nothing to give, it actually is far more expensive than it seems, since it causes a cascading series of overpromotions
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Time is cruel, and there are no monuments in tech.
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5. Show Me the Money

When it comes to financing your dream, use only other people’s money. Entrepreneurship is risky, and you want to ensure that the only skin you have in the game is…well, your actual skin.
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But asking for money and offering nothing back—no service, no product, not even a song—is truly terrifying. It’s like looking into an abyss.
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Mustering up all your courage and desperation, then debasing yourself in front of a stranger, only to be totally ignored—that was worst of all.
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This is sheet
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6. How It Feels to Deposit a Check for Almost $2 Million

You hand it over and there’s nothing. No glimmer of recognition, no hint of surprise on the teller’s face. Business as usual. “You want any cash back?” she asks.
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Our office sent a clear message: This isn’t about us, it’s about the customers
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You didn’t work for us because you wanted a beautiful office. You worked for us because you wanted the chance to do something meaningful.
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Bulls make money. Bears make money. Pigs get slaughtered.”
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That’s one of the great pleasures of being at the helm of a startup in the planning stages. The company is small enough that everyone in it has to wear multiple hats, but big enough that you never have to wear one that doesn’t fit properly
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Culture is a reflection of who you are and what you do—it doesn’t come from carefully worded mission statements and committee meetings.
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7. We Were Almost CinemaCenter

What happens on a backpacking trip also turns out to be a perfect model for what happens in a startup. Startups are small, they’re often lean, and they’ve separated themselves from the dominant mode of thinking within their space. They’re made up of like-minded people who are on a journey, who share a common goal. And they often end up totally lost in the woods.
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Real innovation comes not from top-down pronouncements and narrowly defined tasks. It comes from hiring innovators focused on the big picture who can orient themselves within a problem and solve it without having their hand held the whole time.
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People want to be treated like adults
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What they really want is freedom and responsibility. They want to be loosely coupled but tightly aligned.
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It was a given that once we started working to make Netflix a reality, the hours would be long. All of us knew that, because all of us were Silicon Valley veterans. We’d done the fifty- or sixty- or seventy-hour workweek before. The difference was that this time, we were choosing to do it. We weren’t working for someone else’s dream. We were working for ourselves.
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I didn’t want to be one of those successful entrepreneurs who are on their second or third startup but also on their second or third spouse.
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It doesn’t make a difference how good the ads are if the dogs don’t eat the dog food
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It wasn’t perfect. It sounded a little porn-y. But it was the best we could do.
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8. Ready for Launch

Drink in hand, I wondered if all of this—the car, the furniture museum, the caterers in the kitchen—was in my future, too. I thought of my beat-up Volvo, dog toys in the backseat; the house with a leaky roof I couldn’t at that moment afford to repair; the stained green carpet of the Netflix offices, which had begun to exude a peculiar stench the closer we got to launch day. It seemed unlikely. Or at least far, far in the future.
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But when it was all said and done, we were a website that gave people access to DVDs. We weren’t changing the world like Reed was. We’d fix the Bloody Finger. But for the moment, it was okay.
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Before you launch, you’re making a beautiful battle plan, coordinating the future movements of your troops. The second you launch, you’re in the fog of war.
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. For your first call, there’s nothing like having a friendly voice on the other end of the line
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Christina had said it best—launching the company was like throwing a party, one that you weren’t sure anyone else would attend. You didn’t want to buy extra kegs if no one was going to come.
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That was unacceptable to Jim.
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It would probably never be finished, truthfully. Every day, we’d have to work to keep it upright—to keep the water flowing, to keep the cabinets filled. To keep the burners clean and the gas bill paid. But it was there, now. It was out in the world.
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9. A Day in the Post-Launch Life

We have $93,000 in DVD sales. Barely $1,000 in DVD rentals
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Wearing the New Media Outfit—or NMO, as I sometimes called it—gave me a way to blend in with companies and entities far larger and more powerful than my own
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I’m eternally thankful to Steve Nickerson for taking the plunge. In my estimation, he’s one of the single most important players in the Netflix story. Without his help, there is absolutely no way the company would have succeeded
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But the reality is that you can’t really do it on your own. You need to enlist help. Bring others around to your way of thinking. Let them share in your enthusiasm. Give them the magic glasses that will let them see your vision of the future.
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Maybe the key is meeting in person.
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I don’t tell her that we’re a projected million-dollar company, or mention how concerned I am about where that money is coming from. I just say we can talk more about it at dinner—as usual, I’ll be there.
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10. Halcyon Days

One of the key lessons I learned at Netflix was the necessity not only of creative ideation, or of having the right people around you, but of focus. At a startup, it’s hard enough to get a single thing right, much less a whole bunch of things. Especially if the things you are trying to do are not only dissimilar but actively impede each other
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The ancient Greeks had a term for this: halcyon days. I won’t bore you too much with the mythology, but essentially, they referred to the seven days each year when the winds were calm and Alcyone, a kingfisher, could lay her eggs
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11. Two Cents for Bill Clinton

But that’s the thing about startups—you’re almost always on the razor’s edge between total success and total failure. You learn to live there
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That’s true of most things, really. When you’re busy making your dream into reality, no one praises you until the work is done—and by that time, you’ve long since moved on to other problems.
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12. “I’m Losing Faith in You”

When you try to explain your dream to other people, they won’t understand that it isn’t just about raising funds or customer conversion or daily monitors. It’s a surreal chase, a pursuit that gives your life meaning.
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Radical honesty is great, until it’s aimed at you.
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I had to ask myself: How important was it to see my dream come true? And was it even my dream anymore? We now had forty employees, each of whom was as emotionally committed as I was to making Netflix a success. They stayed late, worked weekends, missed commitments to friends and family, all in service to something that had begun as my dream—but which, God bless them, they had adopted as their own. Didn’t I owe it to them to do everything I could to ensure that we survived, even if it meant that my role would no longer be the one I’d imagined for myself?
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13. Over the Hill

It didn’t matter who you were—Patty would call you on your bullshit. She was never afraid to speak truth to powe
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power.
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But it underscored what was happening, that spring and summer: the startup team was starting to peel off, and the next phase was replacing them.
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A lot of conversations with Reed (and with Patty) were needed to get him to realize how demoralizing it could be, when you made something a priority, asked people to break their backs doing something they didn’t agree with—and then didn’t honor the work they put in.
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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.
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We were always trying to avoid one of the number one pitfalls of startup entrepreneurship: building imaginary castles in your mind, meticulously designed, complete with turrets, drawbridges, moats. 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.
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14. Nobody Knows Anything

“Nobody Knows Anything” isn’t an indictment. It’s a reminder. An encouragement
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Because if Nobody Knows Anything—if it’s truly impossible to know in advance which ideas are the good ones and which aren’t, if it’s impossible to know who is going to succeed and who isn’t—then any idea could be the one to succeed. If Nobody Knows Anything, then you have to trust yourself. You have to test yourself. And you have to be willing to fail.
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Amazon Prime and virtually every subscription plan does it. But at the time it seemed like an overly aggressive money grab—verging on sleazy. Reed hated it.
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“You can’t just charge people’s cards without asking them,” Reed said. “It’s totally unethical.”
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Focus. It’s an entrepreneur’s secret weapon
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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.
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15. Drowning in Our Own Success

Drkoop.com, the online portal founded by 82-year-old retired surgeon general C. Everett Koop—which had managed to go public with not a single penny in revenue—was losing tens of millions of dollars every quarter.
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For instance, when someone says that he’s leaving to spend more time with his family, what that really means is my ass got fired. When someone says this marketing copy just needs some wordsmithing, what they really mean is this sucks and needs to be completely rewritten. When someone says we decided to pivot, what they really mean is we fucked up, royally.
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And when a company decides to seek strategic alternatives, what they’re saying is: We’ve got to sell this sucker. And fast.
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16. Crash

Blockbuster doesn’t want us,” I said. “So it’s obvious what we have to do now.” I smiled. Couldn’t help it. “It looks like now we’re going to have to kick their ass.”
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17. The Belt Tightens

“Sorry, Marc,” he started. “I don’t want to interrupt you, but I wanted to come back and make sure you were okay. This must have been really tough on you.” I held the soccer ball and cocked my head. I didn’t know how to answer. It didn’t make sense. He’d just been laid off, and he was wondering if I was okay? “Well, anyway,” he awkwardly continued after a few seconds. “Thanks for everything.” He turned and started to walk away. But then, just before he passed the end of the row of cubes, he stopped, as if he had suddenly remembered something. “Hey,” he shouted back, a smile on his face. “Crush Blockbuster, okay?” And with that he was gone.
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18. Going Public

Publicly, Microsoft was positioning these features as a way to enhance the gaming experience, but we knew that they were looking into using them for downloading television and movies—and we’d been eyeing a potential partnership.
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No doesn’t always mean no,” I said, and smiled.
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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.
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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.
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Everyone is aligned when the wind is blowing the right way. It’s when a
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It’s when a storm comes up that all of a sudden it becomes apparent that people have different goals and objectives.
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Working, for me, was never about getting rich—it was about the thrill of doing good work, the pleasure of solving problems
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I loved building the company, watching it stumble, then rebuilding it again.
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Epilogue: Randolph’s Rules for Success

And when you’re talking to the press, to an investor, or to a business partner, people really don’t want to hear it. They want a version that’s neat and clean with a bow on it. Reed recognized that almost immediately, and so Reed came up with a story
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Mitch, for his part, used the tests from our three months in Vegas to start another little company. You might have heard of it. It’s called Redbox.
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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.
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The most powerful step that anyone can take to turn their dreams into reality is a simple one: you just need to start. The only real way to find out if your idea is a good one is to do it. You’ll learn more in one hour of doing something than in a lifetime of thinking about it. So take that step. Build something, make something, test something, sell something. Learn for yourself if your idea is a good one.
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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
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something about it that make the difference.”
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