Writing a Business Plan or hurrying to the office and doing a powerpoint, we decided to take the first step so we turned the car around, we drove down to santa cruz. I went to a used music store and buy a music cd. I think it was patsy cline. We went next door and bought a gift envelope like you would put a greeting card in. We put the cd in the envelope and mail to my colleagues house and the next day, he had an unbroken cd and an envelope that had gotten to his house and 24 hours for the price of a firstclass stamp. If there was an aha moment, i think that was it. Peter to where we do call carpooling . Marc reed was the cofounder of a Software Company that had acquired another company that i was working at called integrity qa. I went to work for him and we spent about nine months working together and we lived in the same town so we spent those nine months carpooling. Then, lightning struck. Somehow, inexplicably turning it into a company which is changed the way we watch television. Title comee did the from . Marc it is a quote from the 10,741 other people that i told that idea to. I think everyone has had that experience where you come rushing in the kitchen, some great idea, and everyone says, that will never work. Is aboutays, this book the process of taking an idea that no one thinks will work, that my wife said will never work and somehow turning it into a company that has changed the way we watch television. Peter before we get into the reasons that netflix will never work, there is some lore about the founding of the company and a late fee. What is the lore . Marc people like to hear the epiphany moment. They like to know when it all came clear. They like newton under the apple tree. The guy in the bathtub. The reality is, it doesnt happen like that. Of course, it has been said that it all originated with a late fee on a movie, and yes, there was a late fee on a movie, but it was also someone who had spent many years doing subscriptions. Someone else who had done a lot of personalization. Somebody else who had lots of experience with computer algorithms, with building websites. We had tons of people who each contribute little bits. But when someone asks where does from, theyidea come dont want the 310 page book. If they want the quick soundbite. What itays that is will never work is about. Its about the untold story of netflix. Peter we are talking about 1996. What are the reasons that this was never going to work . Marc so there was lots of reasons everyone told me that one was never going to work. The first one was the obvious one, that if i was going to do dvd rental by mail, it meant i was going to be mailing a disk from someone and they would get it to days later and they would keep it for a number of days and mail it back. People said thats crazy, why would anybody wait two days for a movie when they could go to one of the 9000 Blockbuster Stores . The other reason low, though and perhaps the one that got in our way when it came to raising money was that everyone believed this is a digital format, it was just a matter of minutes before everybody was streaming or downloading. And of course Reed Hastings and i knew this was true that eventually, people would be downloading or streaming movies. We just didnt think it would happen quite that quickly. And the challenge was, how do you build a company which is appropriate now when it is impossible to stream or download something, but have it be in the right place that when that time came along, we would be ready . And it took almost 10 years before netflix transitioned into streaming. Peter those first few days of the company being online, what was that like . Marc well, that will never work in some ways is a compendium of all of the screw ups. All the disasters all of the , missteps, all of the times we almost went out of business, and you are correct, we had our very , very first disaster in day one. We spent six months building a simple ecommerce website and we were so excited. This was the moment we were going to go live, and we had set up a computer in our conference som and rigged it up that a bell would bring every time an order came in. At 9 00 a. M. On april 14, 1998, our cto hit a few keys, and we were live. It didnt take long we got that first ding, and we cheered and began opening up bottles of champagne. Then two or three minutes later, orders, we were so excited, then two more orders. In all the excitement we lost track of things until someone noticed that it had been a while since the bell rang. And we were is it unplugged . Was there a problem . It turned out that in the first 15 minutes of being on line, we had crashed all of our servers. Peter so what did you do . Marc [laughter] remembering that day toasting my success, my memory of that day is being at a electronics, a computer superstore, pushing the shopping cart while our cto piled in all the components that we would use to limp along the website the first long day. We had a pool about how many orders we could get and people said 10, 30. We ended the first day with 107 orders which astounded me. I mean, that was my whole first month forecast. Now looking back, 107 orders seems pretty trite considering where we are now. Peter marc randolph, you spent quite a bit of time perfecting the mailer that netflix used. Marc netflix i mentioned took 10 years before we got to streaming which means we were mailing dvds to people. And we had to go through the post office. We had to do it for a firstclass stamp and do it in a way that didnt get mangled or broken or put off to the side. It turns out that devising the simple envelope that could also double as the return envelope was a real work of art. And we spent hundreds of hours perfecting it. And i couldnt get my mind off it. I dreamed about little red envelopes. And there was one time i , remember coming into the office probably 10 00 at night i used to come back after dinner sometimes walking in just to get something and passing a stack of envelopes. The idea struck me. Before i even knew it, i ran out to my car and got something my wife and i called the restaurant bag. And this was the collection of all of the tools and toys and tape and staples and crayons that you would use to keep three kids under five amused in a restaurant. I remember pulling this thing open and markers and tape and reconstructed the envelope in about two or three hours that night and handing it off to our Warehouse Manager and saying give this one a try. Peter one netflix first went online, you were mailing these by hand. People were packing them by hand. Marc absolutely. At the beginning, it was pretty scrappy. I mean you have no money. , we had a tiny little office, a smelly green carpet, we had the warehouse being stored in an old safe. Not because we were scared of them being stolen. This happened to be an old bank and we had to use every single square foot we had. We didnt even have furniture. People were bringing in beach chairs. I remember one time, my wife came in after dinner one time and she was coming to get me and she looked at me and said wait a minute, are those our dining room chairs . We were doing everything we had to. Peter who funded netflix to begin with . Marc you know Reed Hastings , turned out to have been understatement of the year turned out to have been an unbelievable partner. Perhaps the most important thing is reed was the first person who believed in this idea. He was the first person who did not say that will never work. Reed wrote a check for 1. 9 million. He wrote me a check, he handed it to me and i remember going oh my gosh, this is the biggest check i have ever held in my hands. I took it down to our local wells fargo branch, just retail and i remember standing in line one, with this check wondering whats going to happen . Is the person behind the counter going to hit a little buzzer and then the manager of the bank will come back and serve me champagne . It was kind of an anticlimax because i handed her the check and i think all she said was do you want any cash back . But irote 1. 2 million, also had to go out and ask other people. I had to ask my mother. I had to ask friends. Theres a reason these are called the friends and family around. Peter whats the role of a Venture Capitalist . Is there a negative side to that . Marc Venture Capital is the essential fundraising mechanism that is used in Silicon Valley. And pretty much any place people are doing startups. And these are people who are willing to invest money into a business. They are not loaning the money. They are investing the money and doing it under very long odds. The reality is when people say that will never work, most of the time, they are right. But a Venture Capitalist is willing to take a chance that nine out of 10 investments they make are going to fail. On the off chance that one of them succeeds. And you have mentioned, is there a dark side to it . In some ways, maybe its not a dark side, but you have to know what youre getting into. Because when a Venture Capitalist gives you the money, wasin fact Venture Capital essential in starting and growing netflix, they are not doing it because they really like the idea and want to see you succeed. Although they do. They are doing it because they because not only do they expect their money back. They expect their money back times 10. Once you are in that game, you are all in it for the long game. You cant go to them and say i think i think i have had enough. ,no. Your commitment is that you are going to do Everything Possible to make sure their investment pays off. Peter in your book that will never work, you write that tech is a true meritocracy. Marc it is one of the most wonderful things about tech is that the foundation of tech is coding. It is computer code. And computer code is remarkably transparent. There is a principal among coders called peerreview. After you have written something, you ask one of your peers to sit down and review it with you. It doesnt make a difference what you look like. It doesnt make a difference how you dress or what time of day you got to the office or when you leave or what you smell like. It is all there in the quality of your code. That ethos has permeated Silicon Valley. We certainly are the beneficiaries of that. I would not know a line of code if you wrapped it around my neck, but we all get a chance to recognize we can be casual. We will ultimately be judged on the quality of our work which is a tremendously refreshing thing. Randolph, april 1997, netflix went online. At what point did you feel financially secure . Marc [laughter] well, one of the essential ingredients of being an entrepreneur is you never feel secure financially or otherwise. Certainly in terms of the otherwise piece, it is inherent in a startup that you struggle, and claw and climb your way to the top of the first hill and you collapse ind a heap when you look up only to see a bigger hill in front of you. When we started netflix, our goal was to be as big as a single blockbuster. 750,000 per year and we hit that in the first two or three months. But then you look up and say theres 9000 blockbusters. And once we pass blockbuster, there is hbo. And there is comcast. And there is amazon. It is never ending. Part of that is recognizing, you can never sit back and say we are done. And economically, i have never been someone motivated by how much money i have. That is not the point of this. Its the fun of coming into a room and sitting down with really smart people in solving interesting problems. That i can never get enough of. Peter at one point, blockbuster wanted to buy netflix. Is that correct . Marc that is true. One of the most critical things that i advise earlystage entrepreneurs or in fact any one with a business is you cant run out of money because then its game over. And we had a point this was in 2000 and the company was three years old. And the good news was, we were on track to do 5 million in revenue. The bad news is, we were on track to lose 50 million getting there. You dont need to be a financial analyst to understand thats not sustainable. And so we decided to do this thing that all pertinent entrepreneurs do which is pursue strategic alternatives. Which is code for we have to sell this sucker. Our obvious strategic alternative was blockbuster. But we were 5 million in sales. They were 6 billion in sales. We were probably at that time 300 employees. They were 60,000 employees. We tried getting this meeting. Nothing. As luck would have it, they actually finally called us for a meeting when we were on this corporate retreat in Santa Barbara in the mountains. We flew from Santa Barbara to dallas for the meeting. Because we were on retreat and because of that casualness, i was in shorts and a tshirt, and they usher us into a huge room. Here come the blockbuster folks. They make the pitch about combining the companies. Blockbuster could have bought netflix for 50 million. But they laughed at us. And in some ways, it was a disappointment because i was hoping this could be the thing the deus ex machina that saved us. The instant influx of money or even better, making our problems someone elses problems. But in many ways this was the moment when we finally said to ourselves, wow the only way out , is through. We are going to have solve this two problem on our own. Peter mr. Randolph, you say corporateulture, the culture of netflix is freedom and responsibility. Where did that come from . Is that a common Corporate Culture in Silicon Valley . Commont is a very culture for early stage companies. In an Early Stage Company you have no resources. You have, lets say, seven people doing the job of 100 people. Everyone is stretched thin. There certainly is no time for command and control. There is no time for me to say here is your job, here is what you have to do heres how to do , it. And then check with me every few hours and let me know how it is going. All you can say is, you see that hill over there . I will meet you at the top in a week. They have to figure it out on their own. They have to have the freedom to decide the best way to solve the problem and responsibility to see that it is solved. Its a fairly easy thing to do when you have seven employees because you can handpick people with the responsibility to handle that. It is a little harder when you have 70 and even harder when you have 700. But what is truly remarkable about netflix is they still have managed to preserve that culture with 7000 employees. And that is the remarkable thing about netflix and something that is very very rare. ,peter and something that has continued in a different form but is the subscription model to netflix. That is not something you hit upon right at the beginning. Marc ironically, i kick myself sometimes for missing that. I am one of those persons who was a 40year overnight success. Netflix was my sixth startup. The startups were in the publishing business. I have spent many years mastering magazine circulation and mastering subscriptions. The idea that we could apply subscriptions to video rental by mail was so far out there, the idea for subscription the idea for video rental by mail in general was so far out there that it took us a while to get there. It took us 2. 5 years of failed experiments before we finally stumbled on this crazy combination of things which was the subscription service. It was also the no due dates or late fees. Finally it was making a list of movies you want to see so we can ship them to you automatically. If you had asked me when we launched the company years earlier what would the Business Model look like . I never could have told you it was going to be. Who knew . Peter what do you think of the name netflix . Marc it has grown on me. [laughter] one of my early investors gave me great advice. At the beginning, when you just start, you dont have a formal name. But you still have to write checks, you need to get a lease. You need to have a company name. You have what is called a beta name, which is the name youre going to use when figuring it out. His advice was, pick a beta name which is so bad that when you run into problems finding your real name, you wont be tested to use it. Our beta name was kibble, like the dog food. Thats because one of my favorite sayings was its not a success unless the dogs eat the dog food. You could have the best advertising in the world of the if the dogsrld, but dont eat it nothing happens. , i want that to be the culture of netflix. I had to work for customers. All of the good were taken. Onesthey were trademarked or the domain name was used, or it meant something obscene in a foreign language. In some ways, netflix was the last name standing. Its ok. It was a little porny with that x in the flix there, but it seems to be ok now. One, now showing, these are some of the names you were considering for this company. Describe Reed Hastings. Marc reed is a genius. What can i say . I will immodestly say i am a pretty good earlystage entrepreneur. I am probably in the top 1 . But Reed Hastings is in the top 1 10 of 1 . And not only that he is , phenomenal as an early stage entrepreneur and phenomenal as a late stage entrepreneur. He has the whole package. What was fantastic about working the twod is how will of us work together. In many ways, we brought a combination of skill sets and attitudes. I came from the world of marketing where my entire expertise with empathy, was empathy, understanding how things we said or did were priced or offered would be received by customers. Reed brought this understanding of how he could actually deliver those things in new and different ways and ultimately do it at scale. And then the two of us also brought a culture which we shared of this radical honesty. We could argue like cats and dogs, but then as soon as we stumbled on the right thing, we immediately forget whose idea it might have been, who had raised the objective. We would follow behind what was obviously the right idea. He was a great partner and in many ways, one of the smartest things i ever did at netflix was make room for him to come in fulltime. Peter and in 1998 he said to you im losing faith in you. Marc yes, it was difficult. We had just made the pitch for a series b. It had not gone so well. Poked hisght, reed head into my office and delivered the news, the words that no one likes to hear which is, we have got to talk. He was losing some confidence. He was starting to see problems that at a small stage were just smoke but which ultimately at a large stage would be fire. He made a fairly dramatic proposal. He suggested that he should come into the company fulltime because at the time, he was the largest investor and the chairman, but he was not a fulltime person. He would join the company fulltime, and we would run the company together, him as ceo and me as president. It was a real moment of reckoning for me because on one hand, i had this dream of starting and running a Successful Ecommerce company. But now, i had to ask myself which parts of that dream were the important ones . Was it the starting was it running it part or was it the successful part . I realized that, eventually realized that the thing i really owed was making this dream come true not for me but for everyone else. For my employees, for my investors, for our customers. And i recognize that probably almost inarguably having him join the company and is running us running it together would be the more successful way to do it. Looking back, history would say that was a pretty good decision. Peter you go on to write that reeds emergence as the face of the Company Saved our acids. Marc [laughter] peter lets move forward to 2002 another quote from the book, i will never have to work again. Marc it is funny. I am back in new york today. And last night i got in a little bit late and i spent the day on a plane. I actually walked down to the site of what used to be rays pizza, one of the 17 thousand of them. I remember taking my son there the day of our ipo. This has been the moment that we had been dreaming of for years. The moment where all of a sudden it pays off. I mean my employees, our investors, for my mom. And i remember being in the cab with my then 10yearold son thinking to myself life might be different now. If i want to, i dont need to work again. But in other ways, my life is not going to change. Im going to get in the plane, im going to go home, im going to go back to the office and do email again. I dont feel like i need to go out and get a fancy steak dinner limo or doa something stereotypical. Im doing exactly what i want. Im taking my california son and baptizing him into being a real new yorker by getting him a slice of pizza. And that was really the moment for me. Peter i take it your mother got her 25,000 back. [laughter] marc in spades. [laughter] and there is a certain pleasure in that. She jokingly, when she wrote me that check for the first 25,000, i could tell should did not believe she would ever see a penny of it. She joked and said once this happens, im going to buy that apartment in new york i been thinking about. And lo and behold, she got that apartment in new york. And its on the wonderful things about startups. I have been involved recently in looker datacalled which i have been involved with since day one. I actually convinced someone to design the logo. We couldnt afford to pay them, and so i gave him some shares. I was so excited seven years later to call him up and say you know those shares doing the logo . They are worth more than 1 million now. Peter marc randolph, in our closing minutes, i want to ask about Public Policy issues happening now. We are talking about antitrust, anticompetitive investigations, there is also privacy issues. What is your quick take on those . Marc so i dont have a firm opinion on what is happening because i am too deeply in the middle of it. But more importantly, i am seeing it from a consumers perspective. Certainly from what is happening in streaming, i am actually delighted by the innovations we have seen in how content is delivered. I dont just watch netflix, i watch content from all of the services, and i love the fact this has become this new ubiquitous way to watch things. I also look at netflix and i have to trust that they will be responsible. I know, because of the culture, because of the things that were there from the very beginning that netflix is going to thrive and is going to be a responsible steward, and i am actually really, really excited about the future. Peter that will never work is the name of the book. Marc randolph is the cofounder and first ceo of netflix and he has been our guest. Thank you for your time. Marc it has been a pleasure being with you. Thank you. [captions Copyright National cable satellite corp. 2020] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] announcer 1 television has changed since cspan began 41 years ago but our Mission Continues to provide an unfiltered view of government. We brought you primary election coverage, president ial impeachment process and now the federal spots to the coronavirus. Can watch all of the Affairs Programming online, or listen on our free radio app. Be part of the conversation on the Washington Journal Program or our social media feeds. Cspan, created by private industry, americas Cable Company and brought to you by your sunday night, mostly trader turned photojournalist on his book dignity, about the plight of those living on the margins of society in america. It was a sunday morning, it was empty because all the semis were gone. Immediately, our intelligence came right through and we spoke for about an hour, half an hour or so. She told me her life. Its like a cliche of everything wrong that can happen to somebody. What illy, i asked her ask everybody i photograph, which is, what is one sentence how do you want me to describe you . Give me one sentence. She shot back, what i am, a prostitute, mother, and child of god. This weekend on book tv, sunday at 9 00 p. M. Eastern, a former fbi director with his book the threat, how the fbi protects america in the age of terror in trump. I was concerned by what i impactre the corrosive that these false narratives about the fbi, the corrosive impact of narratives are happening that are having on the people of the fbi and their ability to do their work. If people understood or about the organization, who we are, what kind of people are drawn to the fbi, and how we make the decisions we did, they are based on specific legal authorities and priorities and policies given to us by the department of justice, not based on politics and personal preference. Watch this weekend on book tv cspan 2. Two set thenc chair Republican Party is moving ahead with planning the 2020 convention in charlotte this summer. The Georgetown University institute of politics and Public Affairs hosted this conversation earlier this week. Thank the College Republicans and Bipartisan Coalition for joining us in putting this event together tonight. I want to thank all of you that are tuning in, the students, staff, faculty, that are participating in this zoom discussion as well as everyone in the external audience that is watching us and joining us on facebook, twitter, youtube, where the recording of this event will be posted afterwards. The entire
comparemela.com © 2020. All Rights Reserved.