Netflix co-founder changes channels
Longtime Netflix CEO Reed Hastings is renowned for building a video streaming service that has transformed entertainment, but it probably wouldn’t have happened if not for his friendship with serial entrepreneur Marc Randolph.
While brainstorming with Hastings in 1997, Randolph conceived the DVD-by-mail service that launched Netflix. He then directed Netflix as its first CEO before turning the job over to Hastings in 1999.
Rather than retire and live on his Netflix fortune when he left the company in 2003, Randolph decided to advise early-stage startups. He also wrote a memoir/advice guide, “That Will Never Work,” and hosts a weekly podcast.
Randolph, 64, recently shared his insights with The Associated Press at a cafe near the Santa Cruz, California, post office where he mailed the first test disc for Netflix’s DVD service in 1997.
What have you learned counseling startups?
You expect you are going to be helping with a go-to-market strategy and the technology, but a huge piece of it is marriage counseling. For a lot of the problems you face as a CEO, there is no one else to talk to about it. So if they are struggling with something, they can’t always go to their team and talk. A lot of times they can’t really go to the board either, because they don’t want them to know they are struggling. And they can’t go to their friends because their friends don’t know the details. There really is no one else that is impartial and understanding and knows enough context. I don’t build companies; I build CEOS and founders.
What’s your view of the current economic uncertainty and how it’s affecting the tech sector?
It has been a remarkable decade for tech, accentuated by the last two or three years, but there are a lot of cyclical things that are going to be corrected. Certainly, one is tech valuations and expectations. You had this crazy period for the past 18 to 24 months where employees called the shots, saying, ‘I don’t like what I see, I can get 50 other job offers tomorrow.’ That is going to correct, and I think is going to correct in a positive way.
How did the dot-com bust in 2000 and 2001 affect Netflix?
It was a powerful lesson. We were going to be a (entertainment) portal. Had we gone that way, we would have been defunct because the model was unsustainable. We were lucky it corrected when it did. As painful as that was, it forced upon us this discipline where you realize that whatever service you provide had to cost you less than what you charge for it. Some startups are starting to realize, ‘Holy (crap), this is all about cash flow. All that talk about growth, forget about it, we have to focus on getting through this.’ Those that don’t are just going to keep accelerating right off a cliff.