Lessons: Why You Need Ruthless Prioritization With Your Business | Marc Randolph, Co-Founder of Netflix

Welcome to Lessons episodes of Success Story, part of the HubSpot podcast network. These lessons episodes will be shorter conversations with past guests, valued members of the success story community, and myself. They'll be focused on teaching you actionable, insightful takeaways that you can use to upscale your personal and professional life. Why do you think that so many entrepreneurs seem to over iterate on the MVP as opposed to trying to have that conflict and real feedback with reality, with real people to actually validate very similar to the way that you did with just simply mailing a music CD to read's house? Do you have a comment? I think listen, if you're building an MVP, you're building an animal bowel product, you're building too much, and the problem, and it's whether it's an MVP, whether it's actually raising money, all these things that people do because they think that's how this works, you get emotionally invested in an approach, and the more effort you put into that approach, the harder it is for you to acknowledge it's not working, the harder it is to walk away from it. I mean, even a minimal bowel product sometimes takes weeks or months, or tens of thousands or hundreds of thousands of dollars, and so you're not about to go, oh, didn't work, okay abandon this, let's try something new. Which is why you've got to figure out ways to do it super cheaply, super simply, super quickly. And it's parsing it apart. You want to build a minimal, unviable product, and listen, I'll give you a couple of concrete examples here. You do not need to test all the components of your idea because most of the components of your idea, if you begin parsing it apart, are not, don't need to be tested. You don't need to say can we build an app? You don't need to worry if someone's going to trust me with their credit card. You don't need to worry about whether your app can know where you are. I mean, this stuff has been generated not just that it's technically possible, but that customer has to accept all these things. And you begin to isolate in on what's the one piece of it that I truly don't understand. Well, listen, rather than wasting time with kind of, it gives high level Instagram worthy quote-tile bullshit. Let me give you a specific... Those are also good, but I mean... Yeah, but it's like junk food. You nod your head and go, oh, that's so interesting. And then you go back and go, wait, wait, wait, how do I, how do I do this? In fact, let's have some real examples and we'll have that, let's have something... Potion aspect here. It's the point of the podcast that I do, which is I could certainly go on social media and say, you know, trick is to quickly easily clutter the reality and it won't not. But then it's missing the how, and so in the podcast, I'll sit down with someone for half an hour, an hour who has an idea and will brainstorm through how and you see how this works. But let me give you a specific example. You do it right now. This is from two or three years ago, a bit more than that, actually. And it's a young woman in college and had an idea and I do a bunch of mentoring work at universities and she goes, I have this great idea, quote unquote, she wants to do peer to peer clothing sharing. She goes, I have all this stuff in my closet that I never wear, I know all my friends have stuff that they don't wear, wouldn't it be great if we had this huge network of people who were all showing us their clothes, we could all borrow each other's clothes? And I go, okay, pretty cool, what are you, what are you worrying about? And she goes, well, should I quit school or do this? How do I raise money when I'm just a student or how do I find a technical co-founder to build this app for me? And I'm like, whoa, whoa, slow down or more importantly, speed up. I go, let's figure out quickly, cheaply and easily, whether your idea is a good idea or not. Do you have a piece of paper? And she goes, yes, I'm a college student, I have paper and you'll find, do you have a sharpie? She goes, yeah, I can find a sharpie. I go, great, so I want you to do this paper, I want you to write in the paper, want to borrow my clothes? Knock. And I want you to tape it right now to your dorm room door. And we're going to start this experiment now. And you're going to find something out, either no one's going to knock, well then you've learned something pretty important right there. But let's say people do knock, well, you're going to learn the next phase, okay, first of all there's interest, but now what happens, are there problems with fit, are there problems with style, are there problems with taste? And let's say there is a match that way, now you're going to find out the next thing, how do you feel when your blouse comes back stained or torn? How do you think about the fact, you know, off to bring everything to the dry cleaners? And all of a sudden this begins costing you more. Let's say it all works and all of a sudden you're going to start this process of learning and recognize how many times you someone repeat, how do I find people to do this and you're going to do all of this, not by building an app, not by raising money, not by starting a company, you're going to do it with three by five cards or a yellow pad, you're going to do this in a non-repeatable, non-scalable way because you're going to figure it out on the ground. But the point was, her problem wasn't, well, can I make an app? How do I get credit cards? How do I, yes, those are things she would have to do if she was to make it a real business. But she narrowed it down to the fundamental problem, this is anyone care. And I can find that out with a piece of paper and a sharpie. Okay, now I wonder the problems with fit and taste and style. I can find that out on a very, very small scale test of people who live in my hall. And then what will happen is hopefully, after six months of doing this out of her dorm room with three by five cards in a yellow pad and going crazy because it's so manual and so labor intensive and so inefficient. But that's great because then when it comes time to say, I think I might like to make this a real business and you go to raise money or not waving your arms and going, imagine if you will, you're able to say, I understand now what the repeat rate is. I know what the average order size is. I know what my chair is. I know my acquisition costs are, or even more importantly, rather than going to an engineering friend and saying, I want you to build my idea, which I can assure you with the marketing guy never works, you sit down and go, let me show you what I'm doing and I'm doing it all with paper. I'm looking at three by five cards and that's when people lean in and go, oh, that's so cool. Maybe you could do it this way or this way and they get pulled out of the problem. So it solves so many problems, but the fundamental one is rather than dreaming about it, you do it quickly and easily and cheaply by parsing out what's the one thing that you really need to test. And once you've figured out that one thing, usually that one thing can be tried without technology, without raising money, without other people, without an office, without quitting school, without leaving your day job, without mortgaging your house. You can do it on the side, you can do it quickly, cheaply and easily. It's the trick, the thing that's the most important thing I believe for entrepreneurs starting something. And what I look for in the entrepreneurs that I want to work with is not how good their idea is, because as we mentioned, I fundamentally believe all ideas are bad ideas. What I'm looking for is do I think this person has the creativity and the persistence to say, I'm going to figure out quick, cheap and easy ways to try this and keep trying things until I found these dumb ones, something that actually does work. You mentioned why people stick with their MVPs for too long, because they put so much time and effort into it, they're not willing to walk away. But if you stick something on the front of your dorm room, you wrote in a piece of paper, and that doesn't work, when you wad it up, you throw it in the trash and you write something different the next day, and then you wad that up and throw that in the trash and try something different the third day and eventually someone knocks.