Lessons - Why Your Best Ideas Will Fail | Marc Randolph - Netflix Co-Founder

In this lessons episode, explore why entrepreneurial success depends less on perfect ideas and more on rapid collisions with reality. Discover how embracing flawed concepts accelerates iteration. Understand why quick and simple tests reveal insights that planning cannot and uncover how creativity and persistence drive founders toward solutions that truly work. So that was the that was the first iteration of of Netflix and I want to pick up on some themes that have sort of permeated that process but also things that obviously you speak about now. So before we go down that story even further the concept of it will never work the game that you why is that your core theme what does that mean why is it so important this is an entrepreneurial lesson. Well on the surface every single person who has an idea who fancies themselves an entrepreneur hears that it's what everybody says when you come rushing with great excitement into the office to tell them this new idea it's what your wife says to you it's what your investors say to you it's what your employees say to you it is the universal response to I've got an idea but I've realized that nobody has any clue whether it's going to work or not that in fact there is no possible way to really know in advance whether an idea is a good idea or a bad idea without trying it so that will never work you know it's the name of the book it's the name of the podcast it's the name of the clubhouse room all the things I do revolve around that will never work because it's a reminder to me and I hope to everybody that it's just unknowable and that if you let someone say someone tells you that will never work and you walk away from that going oh I guess it won't work you've made a grave mistake that what you have to do is go well we'll see and then move to that next phase of saying we're going to figure out some way to find out but that also ties into another theme that you speak about quite often where no ideas are good ideas so it's it's almost at a high level without understanding it's conflicting but walk me through the the no ideas are good ideas concept as well so anyone who's worked in any kind of corporate setting is sat in on a brainstorming meeting where the well-meaning moderator gets up in front of the group and goes okay let's get some ground rules here rule number one for this brainstorming session is there's no such thing as a bad idea and I call bullshit on that I think in fact there's plenty of bad ideas in fact I'll go out and a limb and say they're all bad ideas in fact there's no such thing as a good idea every idea is fluid they're all not going to work there's always something wrong I have never found a successful company that became successful doing the thing originally envisioned and if you recognize that no such thing as a good idea after all bad ideas what you recognize is it's futile to keep searching for this perfect idea then in fact what I've got to do is recognize the skill here is not coming up with good ideas the skill is figuring out a clever way to try something to quickly and cheaply and easily collide your idea with reality that's why this I harp on the fact that there's no such thing as a good idea I don't want people to get stuck in this rut I've got to I keep finding flaws and listen forget it stop thinking about it start doing something take the idea and as soon as you can collide with the reality and you are going to find out that it's a bad idea but that's fine but the important thing is not that it's bad the the idea is why is it bad because usually in an association with all the reasons you realize it's not going to work as you envisioned it informs your intuition you get some insight into what might work and you come oh okay let's try this and let's try this and it's that process of iteration of jumping from stepping stone to stepping stone that ultimately does lead you to a place which is interesting and you know I've I've worked with so many companies I you know the size of the companies that I've done with since I left Netflix which is you know 15 plus years ago I've not a chance to work with hundreds of early stage companies and thousands of entrepreneurs and over and over and over again the things that finally work are never the first thing you try it's always this really interesting process of starting and seeing where those collisions with real people lead you why do you think that so many entrepreneurs seem to over iterate on that 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 you know a music CD to to read house you have a I think listen if you're building if you're building an MVP you're building an minimal valuable product you're building too much and the 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 viable 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 gotta I'll give you a very con a couple 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 gonna 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 customers accept all these things and you begin to isolate in on what's the one piece of it that I truly don't understand oh listen rather than wasting time with kind of gives high-level Instagram worthy quote-tile bullshit let me give you a specific those are also good but I mean yeah they won't unite it's like just like junk food you nod your head and go oh that's so interesting and then you go back and go wait wait how how do I how do I do this in fact okay so let's have some real examples then let's have that let's have something promotion 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 will 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 couple 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 are 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 warning about and she goes well like should I quit school or do this how do I raise money when I'm just a student or how do I find a 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 ideas 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 got great so I want you to do is hit the paper you're right 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 or the problems with style or the 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 what can I make an app how do I get credit cards how do I yes those are things you would have to do if she was to make it a real business which she narrowed it down to the fundamental problem was is anyone care and I can find that out with a piece of paper in 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 you're 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 churn 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 doing the three by five cards and 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 into 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 figure 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 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 stumble on something that actually does work you mentioned why people stick with their MVP's for too long because they put so much time and effort into it they're not going 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 that's the process thanks for tuning in if you found this valuable don't forget to hit that subscribe button so you never miss an episode and if you want to dive deeper into this conversation check out the links in the description to watch the full episode see you in the next one