Marc Randolph - Co-Founder & First CEO of Netflix | Building a $100 Billion Dollar Company

Welcome to success story, the most useful podcast in the world. I'm your host, Scott D. Clary. The success story podcast is part of the Blue Wire podcast network as well as the HubSpot podcast network. HubSpot podcast network has other great podcasts like marketing made simple hosted by Dr. J.J. Peterson. Now marketing made simple brings you practical tips to make your marketing easy and more importantly make it work. If you like any of these topics, you definitely want to go check out the show, how to write and deliver a captivating speech, how to market yourself into a new job, how design can help and also hurt your revenue, creating a social media ad strategy that actually works. If these topics resonate with you, go check out marketing made simple wherever you get your podcast. Today, my guest is Mark Randolph. Mark is a veteran Silicon Valley entrepreneur, advisor, investor and keynote speaker. He was the co-founder of the online movie and television streaming service Netflix, serving as their founding CEO as the executive producer of their website and as a member of their board of directors until his retirement in 2004. Although he is best known for starting Netflix, Mark's career as an entrepreneur spans more than four decades. He's been a founder of more than half a dozen other successful startups, a mentor to hundreds of early sage entrepreneurs and an investor in numerous successful as well as a large number of unsuccessful tech ventures. So we spoke about him building Netflix from the ground up. We spoke about why no ideas are good ideas. We spoke about issues with over iterating on an MVP. We spoke about the importance of self-awareness, chasing shiny objects, when to give up and a million other entrepreneurial lessons. Well, you know, I probably wouldn't describe it as having been pushed toward entrepreneurship. I think it's a little bit closer to being drawn to it. And it's perhaps better even to realize that back when I started, you know, this was 40, 50 years ago, this whole entrepreneurship thing wasn't the thing. I mean, you know, there were people, of course, who started companies. There were entrepreneurs, but no one talked about it. They weren't glorified. There weren't TV shows, movies, podcasts to be. So I was not growing up like you grow up, you wanting to be a fireman or a doctor or something like that. I was just someone who was kind of always trying to solve problems. Or I'd see something that I thought needed doing and I'd begin wondering as there a way to do it. I mean, and even going back to I was a little kid, you know, I had this job when I was probably eight or ten. And I was a door to door salesman selling seeds, you know, like you plant in a garden, like vegetable seeds and flower seeds. And it was really some kind of child labor exploitation. Because, you know, I think the premise was if you could sell 6,000 packs of seeds, you would earn a whistle or, you know, something ridiculous like that. Nonetheless, I did, oh yeah, it's highly illegal, but numerous was. But it would go going up, knocking on a door and 99 times of 100, nothing would happen. Either they wouldn't answer the door, they'd answer the door and shut the door. But I imagine most of the kids who would do this would say, okay, it'd hell with this. And then back to the couch to watch my three sons or whatever TV shows were back in the 60s. But for some reason, you know, I was intrigued. I would go, I've got to figure this out. And then somebody would actually buy something and I go, that was awesome. Now what can I do to try and repeat that? Or what can I do to try and get a bigger order? Or how can I put things together? In other words, I was just drawn to trying to figure out better ways to do something. And that never stopped. So this is not like all of a sudden I went to school for entrepreneurship and studied business. And then when I got out, it said, let's start a company. It's this natural progression. I mean, in school, I started clubs, started magazines, put on plays. Just saw something that looked interesting and said, I wonder if I can figure out a way to do it. And in many ways, that I was lucky that entrepreneurship actually ended up being something that you can make a living at. Because otherwise, I think someone who was as distracted as I was would be chronic but unemployed curious problem solver. These are classic traits of anybody who has found some success in building their own thing. But you were building things before it was cool and before entrepreneurship is glorified. And I think that's also something that you speak about quite often. But okay, so let's we'll go into what entrepreneurship is and what entrepreneurship isn't in a bit. But when when did you decide to build your own thing versus getting another job? What was the what was the origin story of the Netflix, you know, how it started with DVDs? Well, Netflix wasn't why did that happen? It wasn't like I was, oh, I was working in Safeway as a bagger and I said, I'm going to do my no. You know, Netflix was startup number six. And so and the first one is, you know, they just kind of come along. Netflix though, I had already gotten in pretty deep. I mean, I already realized that I loved doing this. And so when the company that I was working at, a company that acquired my fifth startup and a company that happened to have been started and was currently being run by Reed Hastings, when we sold that company and I realized I was going to be out of a job, it was a fairly natural thing to say, okay, I'm going to start another one. And the question, of course, was what, what am I going to start? Because this was not like I was a movie guy, you know, that I was lifelong passion. I wasn't like a Quentin Tarantino who had grown up in a video store or something like that. I had certain things that intrigued me. I certainly wanted to do something with the internet, which was still pretty early back then. I was really sure I wanted to do something in e-commerce. I was pretty sure I wanted to do something that involved deep personalization. But other than that, I was open. You know, and at the time, Reed, who was running the company we were selling, he was going to be out of a job too. He didn't want to start another company. He was going to go back to school. But he, you know, once your entrepreneur, you're always an entrepreneur and he wanted to try and keep a hand in the startup game. And so we kind of came to this agreement that he'd be my angel investor, that he would be the chair of the board. We would come up with an idea together and then I would start it and run it and that was the plan. And then from there, it just began this long cycle of brainstorming and idea validation that eventually did land on something that ended up being interesting. Before we speak about idea validation and how you validated Netflix, how did you build this relationship with Reed that allowed you to get to the point where he was saying, whatever you start, I want to be the partner, I want to invest in it. Walk me through that co-founder relationship. So I got to go back to startup number five, which was a pretty geeky tech product. I mean, it was doing quality assurance software, the tools that the QA department would use. And we were early, I mean, we had maybe a dozen employees, maybe less, maybe ten employees, when Reed's company bought us. And so I was plunged from a company which was really pre-product. I mean, we were still in beta to all the sudden, the rest of the team, the engineers, they all went down into the basement of this big building to form a business unit to sell that product. And then Reed grabbed me and said, I need a head of corporate marketing. And so all of a sudden I was taken out of this little ten person cerebral startup and plunged into this thousand plus employee international massive software company. But the lucky break, besides the fact we got to sell a company and got to work, was that Reed and I lived in the same town. And so Reed and I began carpooling to work every day. And we had six months of carpooling back and forth to get to know each other. We also, we work together. In fact, one of the very, very, very first things projects he had was he had a big speech to a sales meeting or something like that. And he goes, all right, let's start. You've got to help me with this. And as you know, sometimes when you're working on a speech with someone, he's been a lot of time kind of at the whiteboard going through ideas, helping them practice, helping them or hers. And I remember him going, wow, I think he looked to scance a little bit at marketing people. You know, he's a mathematician, he's an engineer. And I think he kind of was watching how I was working with him on putting together this keynote and going, well, wow, you're actually pretty good at this. But that was at the very beginning. We had six months to get to know each other. And we hit it off immediately. I mean, I think we shared a couple of common cultural ingredients that we recognized in each other. But I think we recognized we're reasonably rare. I mean, one is that Reed and I were always unsparingly honest with each other. Both of us just coincidentally have never been people who kind of mince words or shade the truth or avoid saying something because we don't want to hurt someone's feelings. We just kind of say it. We also loved arguing. And loved arguing in this totally ego this way where you quickly realize you're both arguing not because you're trying to prove that you're right for the sake of you being the one that's right because you're arguing in his desire to try and find the right answer. Yeah, that radical. Yeah, Candor. Candor, that's something that go ahead and know as I say something that I see very effective. And I guess that's, you know, before Kim Scott wrote that book, that's what you were living and breathing at with, and then eventually through Netflix. And I think that that's still to this day part of the culture, which I think is very an important ingredient. And that culture springs from who you are. But in other words, those are the reasons I did establish both a friendship, professional respect, and this appreciation for entrepreneurship. You know, I had started a bunch of companies. He had started and was running this by now, very large public company. And so part of the fun game in the car is why isn't there a or why can't we? It's the game that entrepreneurs play where they have no intention of selling it starting it, but you go to lunch and you begin just throwing ideas back and forth because that's just such an interesting intellectual exercise. And I think that's why that when all of a sudden we sold Reed's company and the dust began to settle, it was not this, oh no, what am I going to do? It was a little bit of glee in that. Cool. We get to get to do it again. All right. So you and Reed are in whatever it is you're doing next together. How do you how do you validate that the first iteration of Netflix is a viable business that you want to dive into? The exercise that Reed and I would go through is he picked me up at my house. And we had maybe a 40 minute commute sometimes a little less frequently quite a bit more. And besides the usual back and forth, I would pitch ideas to him. So I'd get in the car and say, okay, I got one for you. And boom, here we go. You know, one of the ones I pitched kind of famously was his personalized shampoo idea where you cut off a lock of your hair, you would mail it to us and our team of ace hair scientists would formulate a custom blend just for you Scott. And then you would subscribe to it. And then you'd pitch the idea and Reed would sit there and he's driving and just staring at the window and not saying anything. And a minute would go by. And then maybe a minute and a half or two minutes. And for those who would be on a custom to this would be an awkward silence. But I'm, you know, I've been through this before because eventually I know it's going to happen. He's going to turn. He's going to go, that'll never work. And here's why. And he lays it into me. And you know, here's why the markets wrong. Here's why it's too expensive. Here's why we have government regulation. All the reasons. That's a bad idea. But he doesn't expect that to be the end of the conversation. And it wouldn't be because I'm no, you know, I'm no shrinking violet as I'd come right back at him and go, no, you're wrong. And it's in research and that's we go into this big one, one of our famous problem solving arguments. And then I'd get to the office and I have all this time because I didn't really have much to do because we were in kind of due diligence for the closing of the business. And I do all the research on it and try and figure out other flaws that I've seen as someone else done this before. And more often than not we'd find there was some huge hole we hadn't anticipated. And that was out the window in the next morning and no big deal. I'm ready to go again. Okay, read custom dog food, you know, or personalized sporting goods. We're going to make either baseball bats or surfboards on a computer driven milling machine. And then one of them was, okay, read video rental by mail. We're going to let people have a single video store. We will have all the videos available to rent and we will mail you the movie. And of course that had all kinds of flaws. And probably the biggest fundamental flaw of that idea was the fact that back then, this is in 1997, a video came on to VHS cassette. It was big and heavy, plastic, expensive, fragile things. And so that idea quickly turned out not to work. I mean, I had a lot of mail order experience. So I knew what it cost to ship things around the country using DHL and Federal Express. So that one got abandoned and ended up in a pile on the side of the road. And what actually broke this one open was when one morning read mentioned he heard about this technology called the DVD. And wondered if maybe that would be something that might help us with that idea we had had a while ago about the video rental by mail. And then here's, I guess, is a long meandering story to get into the whole validation phase. And this one, because the thing is when reading I had ideas, we did not, that we liked. It wasn't like we all said, great, let's start working on a business plan. Let's not imagine all the things we can do. Let's not work on a pitch deck. We were always shifting gears quickly and saying, how can we validate whether this idea has merit or not? Short of building the whole company. And in this case, we said, listen, the fundamental premise here is that we can mail DVDs. We can use the US mail. Way cheaper. And then you get into this argument, well, is that going to work? Is it just going to break? What's it going to cost? We go screw it. Let's just find out. And so right in the middle of our commute, we turned the car around and drove down to Scott's Valley where we started down to Santa Cruz, tried to buy a DVD. Of course, there wasn't any. It was in test market. So settled for a used music CD and popped that into a little pink gift envelope like you put a greeting card in and mailed it to Reed's house in Santa Cruz. And the very next morning when he came to pick me up, he had an unbroken CD and a little envelope that had gotten to his house in less than 24 hours for the price of first class stamp. And that probably was the moment we realized this actually might be worth giving it a shot. So that was the, that was the first iteration 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 played, 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 it's new ideas, 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. 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 one of our 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, if someone tells you that one of our 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 or 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 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, all about an element say they're all bad ideas. In fact, there's no such thing as a good idea. Every idea is flawed. 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, but all bad ideas, what you recognize is it's futile to keep searching for this perfect idea. That 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 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 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 idea is why is it bad? Because usually in 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 worked with so many companies, you know, the size of the companies that I've done, which since I left Netflix, which is, you know, 15 plus years ago, I've not had 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. I just want to take a second and thank the sponsor of today's episode, HubSpot. Now, security is one of the major issues big tech is currently facing from AI scrapes to data leaks, starting your business solidly can be just as difficult as growing it securely. HubSpot is on a mission to help your business grow better with the CRM platform that grows with you. Start your venture with HubSpots, either to use secure website builder that scales with your business. As you grow, ensure your team of two is just as secure as your team of two hundred with secure sign on content and asset petitioning and scalable team permissions. Whatever comes next, make sure your business is ready for it. Learn how your business can grow better at HubSpot.com. 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 a music CD to to Reed's house. I think, listen, if you're building an MVP, you're building an animal valve of 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 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 this is like, 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 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. 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 do this? In fact, let's have some real examples. Let's have something to mention. 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 nod. 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 simple, 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 wondering 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, take the 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, was does 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 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 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 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 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 it's the trick the thing that's the most important thing I believe for entrepreneurs starting something and what I look for and 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 finally stumble on something that actually does work. You mentioned why do people stick with their MVP's 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 watered it up you throw it in the trash and you write something different the next day and then you wow that up and throw that in the trash and try something different the third day and eventually someone knocks that's the process. For an entrepreneur when is the point when they're chasing the new shiny object versus giving up on a potentially viable business idea too soon or holding onto it so long because there's a there's a balancing act they have to have and I know that I've even you know even one lesson from Netflix is your decision to enter or not enter Canada that's at a macro scale as shiny objects syndrome but how do you how do you how do you walk work through that problem so that you're not just chasing the next thing because you've given up too quick. Just trying to think with the best way to answer this is you know I think that when do you know when it's time to give up is an artificial question I really don't think people ever say that to themselves at least I mean it's it's an interesting thought experiment but when you're in the trenches you almost never give up because yeah that's fair you just don't give up and I'm not saying it's because you're so persistent and bullheaded but how many entrepreneurs do you know who give up almost always your force to give up you run out of money or you run out of time or the things is quite frankly don't work but you don't like say oh well done you try something else and that's not to say you stick with the same thing in some ways I give up all the time I'm giving up constantly I never get wedded to my ideas I was not working fine in the trash it goes and I'll try something completely differently and I'm even willing to do that when the thing I'm giving up is working it's just not going to be the thing I need to do to be successful in the future I'm willing to walk away from current success to do what I know the customer is going to do you know if they're totally separate that you're you're you're you're talking about is somewhat different than the shiny object problem which is I think different that's a focus that's a focus problem okay so yeah okay that's fair that's fair but that's still I want to I want to get your info on that as well so let's let's separate those two problems so that the the being force to give up maybe that is a thought experiment maybe you're right if somebody is truly entrepreneurial they will not give up but tons of them don't give up you know I've got lots of people who have failed companies and that's no you know no badge of shame but it's not like they all have said go well guess there's no more good ideas I guess we're done or this is just not working I'm gonna stop and it's the reason is because for most people well this is a dangerous thing to say who are in it for the right reasons the success part of it is not what they're looking for as you mentioned it as you recognized me at the very beginning it's all about curiosity and solving problems and the fact that stuff keeps not working just makes you more curious but what is going to work because every failed experiment teaches you something you become so educated about your problem it isn't like you give up on the problem you give up on the idea in a second so that's why they're all bad ideas but that problem that never really goes away but the focus is a different one because there absolutely is a shiny object problem and there's two types of these shiny object problems one is the fact that when you start you're dramatically under-resourced you have a handful you have just you in your dorm room to use the example from before or even once you start a company you have just a handful of people you have limited dollars you have limited amounts of time and there's a hundred things that need doing and to do all of them well is resources so far beyond what you have and you have to recognize I can't it's impossible and the mistake people make is they feel they have to do everything and so as a result they do everything to the 20 or 30 percent level you know they say we're going to have a marketing program that's 20 there's no sales 33 percent our website 23 percent PR 20 they have this huge lift we're going to need to have a human resources policies to we need to write down our company culture everything is shitty and half-ass and not done well yeah it's just like but because they think oh I have to have all these things done or all of a sudden you launch and you've got your customers saying we need this feature we need this feature this feature this service this we need different price plans we need this geography and you can't do all those things well it's there's so many things conspire against a startup that if you going in with everything at this 20 to 30 percent level you're doomed so the focus piece is recognizing that fundamentally there's probably just one or two things that if you get them right all the rest takes care of itself that it really is this triage where of all the things that are on fire a bunch of them well listen no matter what you do they're still going to be poor so that that doesn't help and a bunch of them there's going to be fine no matter what you do but there's a few that your time and attention will make the difference between success and failure and the skill of an entrepreneur is to recognize what are those two or three things and then have the discipline to focus their time attention in the company's resources on those handful of things it's really really hard to do but it's such a critical skill and like you said there's always things that are tempting you and the one you alluded to of course that looks early days was what we call the you know the Canada problem which is that people say you should wow you're trying to grow you should expand into Canada that's about an almost instant 10 percent pop you know that market size is about one 10th of the United States it's easy and the one of the lessons of course is that this so-called low-hanging fruit rarely is that what seems easy once you begin getting into it ends up having all kinds of weird intricacies to it you know it's a different language in parts of Canada they have a different currency there's different rights for some of the movies you're selling and renting and the time and attention to get that right for 10 percent revenue bank gain that if you took all the time and attention you're spend defocusing on going after Canada and focus it on your internal business you'd reap way more than a 10 percent gain and you have to be willing to wait and another one is what all of a sudden people hasn't began to get some success competitors come up you know someone launches a Netflix clone in the UK and believe me the temptation is huge to say we better jump into the UK to nip this in the bud but you have to say no taking our very very best people and keeping them focused on our internal problem here is going to be much much more valuable because eventually when we do enter the UK in two or three years we'll be in such a stronger position we can't let ourselves get distracted we can't allow ourselves to get spread too thin and the now getting deep on this one the other hidden trap is that not only is there a distraction of doing two things at the same time but those two things cut against each other in other words it's not just taking resources and putting it on Canada but what that does fundamentally is make it worse with your with your core market because they conflict in many ways all of a sudden you go we have to structure it this way and all of a sudden you're going no no that's not what's best for the customer here in the US I know but we need to compromise a little bit to make it work yeah it's not at the very beginning when we launched Netflix this is back in 1998 you know it doesn't look anything like it does now you know we were mailing movies to people it was no no streaming if you wanted a movie we mailed it to you in a little red envelope and we didn't just rent movies we sold them and sold a ton of movies and it ended up being something like 95% of our revenue and this was kind of a version of the Canada principle but in reverse is here we had this phenomenal sales business but kind of recognized strategically this was a bad idea you know that eventually Amazon was going to come in this back then they were just doing books then eventually Walmart's going to come in and Kmart and I don't know Petsmart they're all going to begin selling DVDs and then we're toast but to the point I was just making the problem is that doing both was making everything more difficult it was confusing the customers all of our all of our metrics were hard to interpret because there was two types of customers our checkout process was more complicated than it needed to be to accommodate that some people were renting somewhere buying our inventory management mean everything was being made more difficult and we said we don't have to focus we're going to have to pick one of these which would be hard enough to get right and that the big strategic challenge of course was which one do you focus on and you focus on selling movies which is 95 plus percent of your revenue but is eventually going to go out of business where do you focus on rental which is a tiny piece but if you can get it right has the potential of being huge and so it requires this courage to say I'm willing to walk away from this this case huge shine huge extremely shiny object to say fundamentally I know what I have to do for the future and I know that every minute that I maintain two lines of business is just making it less likely that the one that fundamentally is my future is ever going to see the future it's interesting that you had to go through that because I see that many many companies seem to launch more products and customers they have customers so it seems so simple at its core but you you took the executive you made the executive decision you cut off all the sales business and you weathered that storm when I guess I don't really have a question I'm just more curious about the the the the culture of the company how they survived that how you know what was the living and breathing that day and day out as you went through that process it's terrifying I mean it's it you all of a sudden go from having 90 you know a certain revenue level down to five percent of that revenue revenue level level and part of your role as a leader is to be able to communicate with clarity and confidence we're going this way and here's why even if in fact in some cases you're not quite clear of that confidence internally that this is the right right path but it's also because in a startup when you begin building that team in my opinion you're less interested in finding people with deep specific task expertise you're surrounding yourself with people who have the right mindset to be in a startup who are totally comfortable with the idea that you're going to be constantly trying things and when they demonstrate they're not working you're going to walk away from them that you're going to come into work each day maybe doing something a little different than you did the previous day so this wasn't like the challenges that a lot of big companies face when they have to pivot like this that is brutal this was I won't say it's easy but I think a lot of people can be shown that fundamentally our future is in that case rental and that even though the sales is quote unquote working can't you see how it's getting in the way of us fundamentally doing the right thing and it's not like everyone just all of a sudden goes okay and off you go there's a lot of people of course who are invested in certain ways of doing it it takes the while to come around but this is not it's it's a courage thing more than anything it's recognizing that you're willing to walk away from something which is quote unquote successful because you see that no the future is somewhere else and Netflix has done that over and over again no well that it seems to be again like this this culture that is ingrained in Netflix is what has led to their success and part of it is part of it is the ability to make these decisions the the candor the transparency like all this stuff is what obviously you know you don't look at the end result it's the story tells itself but that's that's the these are the lessons that entrepreneurs have to internalize when they're starting their own thing and these are things that they build into the company from day one it is that you know this is the culture is so it's so critical because the you can do it when there's you know I think when we did that walking away from selling DVDs you know what we're 30 people 40 people that's reasonably straightforward but when it's 400 people or 4,000 people it's a it's a very very different story and unless you have this cultural sense that that's the way to approach problems it's really really hard and I think that's what gets big companies in trouble which is that you all of a sudden become successful you all of a sudden find your repeatable scalable business model and you realize wow I can actually see pretty far into the future I can see that it's going to go up and up and up and up and then you say well let's begin maybe we should begin trying to shorten our supply chains maybe we should try and shave some margin points maybe we should become more efficient and there is very specialized people who are phenomenally good at that who are experts in these certain functions and the people who are generalists who are just not super talented in a specific task leave and are replaced by specialists but then the world changes and those specialists are not the right people who are comfortable coming to work the next day doing something completely different and you get you get locked in it's a very very dangerous situation in the culture I think that Netflix built was in some ways based on this realization which was we never wanted that to happen we wanted to never lose that flexibility that experimentation that there's risk taking of a startup no matter how big the company got and I think to some degree they've been very successful that it's a big piece of their success very smart um okay this was a I don't want to I don't want to run you too long but I what I want to do is I want to finish up the Netflix story I want to speak about the stuff that you're working on now I know I say finish up the Netflix story it's like you haven't got four hours like no no we'll try and wrap up the Netflix story what you're working on now and then I have rapid fire questions for you if that's okay okay um I'll pontificate a little bit less though no it's great listen this is this is your this is your moment um so you you left Netflix um why did you feel it was right to leave Netflix and move on to something else that was sort of wrapping up a major point in your career obviously yeah it's a you know as I mentioned Netflix was you know number six so I've been doing it for a long time and I had learned um obviously a ton of stuff about entrepreneurship and business but I learned something else pretty fundamentally critical which is I learned uh what I liked and I look to do and I learned what I was good at and both of those were the same thing which was this early stage company uh business I love that problem solving I love coming in and going how are we going to find the path something that will work I love sitting around the table with all the really smart people solving really hard problems and you know by the time I left which was in 2002 uh Netflix was no longer a small company I mean we had our IPO uh we had found the repeatable scalable model um we were growing like crazy and at the time of course I loved the company maybe you love it let you live a child it's your baby but I slowly came to the realization that hey I didn't really like what I was working on these were not early stage company problems these were not start up problems and perhaps more importantly I began to realize I'm not very good at it I'm not a big company guy and you realize well in some ways that's what success is all about is being able to spend your time working on things that you enjoy and that you're good at uh and that's startups and so I made made decision this is probably a time to go I mean it took a long time it took almost a year to a little by little transitional our responsibilities that other people so that didn't impact the company um but uh I have zero regrets um about leaving uh I have gotten the chance to work with lots of early stage companies I started another company after Netflix um I'm happy as a clam you know and and read he is running that company and it's done an unbelievable job way better than I could ever have done uh taking it from where it was when I left to the amazing company that it is today he's happy as a clam this worked out great for everybody one thing you're one thing obviously you're you're very good at is being is self-aware is being self-aware excuse me that's another you know I think this was like a laundry list of all the right things to do or be as an entrepreneur in the past hour and that's just another it's another thing you know know know what you're good at know your strengths and your weaknesses um is that was that intuitive was that something that you've always been aware of or is that something you had to learn over your career you have to learn it over your career no you know you listen you I didn't probably figure some of those important things out about myself until I was at late 20s maybe even early 30s I mean I was lucky I started Netflix and I was 38 so I had learned the hard way a lot of things about myself I had been in jobs that I hated uh I you know I had made big mistakes so certainly in fact one of the reasons that I kind of do what I do which is where I mentor entrepreneurs right do the podcast and do these things is I'm trying to show people this is not magic that it's not like all of a sudden I was born as this miraculous startup person no I just I started early and I just kept sticking at it and I learned as I went and the things that I've learned are not beyond the ability of anybody to pick up ones you're willing to try long as you take your idea get it out of your head and collide it with reality I mean as long as you're willing to start um you'll learn and yeah self-awareness is important it's like a lead follower get out of the way thing yeah most people don't recognize that and I unfortunately a lot of company founders don't recognize that they to them the company success and their role in the company are index trickably tied together and I think if you're truly self-aware you go okay I'm phenomenally good at starting companies but um might not be the right person to take this company to the next level and at some point you have to recognize that and say I'm willing to find someone who I can the number of people who can go from zero to a thousand is extremely small you know I count them on two hands probably yeah and uh you know even Steve Jobs screwed it up really uh but you know let you with lead hastings uh Elon Musk maybe Jeff Bezos there's not a lot of people who I mean I thought there are more of course but who can have the skill to be an early stage guy and a late stage person um pretty rare um okay so uh a few last last point and I'll do some rapid fire so what are you working on now what's the the goal of the podcast probably is reflected in the book as well so walk me through that yeah the it's all part of the same thing which is kind of I've learned over the 40 years that all these tips and tricks and secrets that I've learned in my own careers and entrepreneur are great for starting companies but they're really the same things you would do if you had any idea you wanted to make real you know whether it's starting a company whether it's just getting a better job in an established company or whether it's doing something else in your life it all starts with figuring out breaking down the problem and saying how do I take those first steps and I've really said my whole purpose in life now is to help get people to take those steps to take the idea and try and make it real or if they have it as a side gig how do you turn the side gig into a real thing or if you have a real thing how do you build that to the next level and how do you do it in a way that you have a life how do you find balance how do you work with your co-founders how do you build a board that supports you and there's all these pieces to it that they don't teach everyone says follow your dreams but then they know whatever teaches you what how do you how do we follow your dreams and that's what I'm really trying to do I mean I the book yes it's all the untold stories about starting and growing a company but it really is me trying to pass along all these things that I've learned about entrepreneurship and how to apply that to business under your life you know I know I do the podcast where right now are we two weeks soon to be every week you know I sit down with an entrepreneur and spend an hour with them trying to help coach them through these are not interviews with celebrity entrepreneurs these are not how I built this episode these are let's see if we can solve a problem together and that's become pretty much what I spend my time now I still work very closely with a handful of companies as a mentor to the founding teams I never want to be the guy who talks about stuff that he's not actually doing and it's my fix you know I I like I said I love the whole startup game and this is my chance to sit down that handful of really smart people solving really interesting problems and then I get to go home at five and they step on I trying to solve those problems it's the best of both worlds right all right um biggest biggest personal challenge in your career how did you overcome it balanced you know I recognize pretty early on I didn't want to be one of those guys who was on their six or seven startup but also on their six or seventh wife my personal fulfillment as a as a for myself is outdoor stuff you know so this is doing things which are not the type of activities you can squeeze in between an 11 o'clock phone call on a two o'clock meeting they require multiple bush playing flights to get back to some river for kayaking it or even full days of climbing so bow if I wanted to have those things in my life and do startups which tend to be seven by 24 pursuits I would have to really figure out a way to do that now I'm actually pretty proud that I think I have done I'm perhaps prouder of the fact not that I started all these companies I'm proud of the fact that I was able to do that while um getting out of the woods going surfing going mountain biking going backcountry skiing um and you know staying married and best friends with the same woman for all these years so there's that that was my biggest challenge that's a that's a good way to overcome it challenge challenge successfully completed um okay still working on your yeah of course um if you could tell your 20 year old self one thing what would it be uh trust your trust your gut on people or trust your gut on uh direction uh that took me 10 years to figure out and I wish I had done that a little bit sooner uh the whole the reason I'm hammering on nobody knows anything the reason I'm hammering on that will never work is to try and give people the confidence that no no your intuitions are good you should uh fall them what people and about um ideas um if you had to choose one person in your life uh it could be personal or you know career that had a big impact on you who was it and what did he teach you I've really um been incredibly lucky that I've worked with three amazing entrepreneurs early uh and just what I got a chance to do is watch oh I'm sorry I didn't have do not disturb on all kinds of bells and whistles are going off in my uh in my ear um well yes I've been really incredibly fortunate that I've had a chance to work with really amazing entrepreneurs just getting to watch them when was a guy named Peter Godfrey who hired me to help start a magazine with him and seeing how he worked with amazing I look with a guy named Philippe Khan founded a company called Borland um who I worked with and there is something that comes from seeing how amazing entrepreneurs work that imprints yourself which is why I think um apprenticeships to powerful thing is getting a chance to get a front row seat um with someone who really is good at this is invaluable very good um a book or podcast outside of your own that you'd recommend people check out I'm not a good at recommending that I don't I don't I do listen to a lot of okay it's been podcast but not for professional stuff okay no that's I don't learn it that way it's uh it's it's just honest I don't I'm not a big voracious business book reader or a business oh it doesn't have to be it doesn't have to be it would be something that just inspired you that that you think other people could benefit from it's I pass okay we'll pass on that one and then obviously you're gonna you're gonna yeah I don't mind yeah don't speak about things don't know much about it no no I appreciate that's fine um uh and last question uh what is success mean to you yeah that's a good one uh and in some ways I answered it earlier I really come to believe that success is this ability to spend your time working um on things that you really like doing and that you really enjoy because if you can put yourself in position with that's what you get to do as the old saying goes it's not work anymore and if you're driving yourself to work hard for some externality like uh money or position or something like that it's just unsustainable but if you can find the thing that you really love doing that you're good at um success isn't going to come success is already there um but I will close with probably the thing that I'm the most proud of which is the success of not just having multiple companies which have been successful uh it's the fact that I was able to do that while staying whole um well I still do continually it was able to get out um and do the things I knew that personally fulfilled me all my outdoor stuff I was able to stay married the same woman she's still my best friend I have three kids who have grown up knowing me and best I can tell liking me um and I can't think of anything um I can't think of it being more successful and having that be the case beautiful um and then where should people go to connect with you social get your book website all of that well the first thing of course is to remember that that will never work because it's the name of the book uh that one never works the name of the podcast I do a clubhouse uh where I do live mentoring for people from the audience uh every Tuesday at five o'clock p.m. Pacific called that will never work uh but the real hub for all things uh mark Randolph is markrandolph.com that's where people can find all my blogs sign up for my email list doing entrepreneurial advice they can get the podcast they can get the book except plus if you don't have attention span for a 30 or 40 minute podcast or a 300 page book uh you'll can find it whatever size fits beyond Twitter or Instagram or even I didn't know that there isn't yeah there isn't it there's an adventure uh it is still trying to find my way that's a different beast but that's the fun thing isn't it long as we're still learning you know it never gets old