'Up In Your Business' With Netflix Co-Founder Marc Randolph

When discussing what it takes to be a successful executive leader, there's no better person to chat it up with than Netflix Co-founder Marc Randolph. With more than four decades of entrepreneurial experience down his sleeve — as well as other accomplishments such as a podcast (That Will Never Work) in the top five of Top Entrepreneur Podcasts and a bestselling memoir, That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea — Randolph has a host of incredible stories to share. 

The lessons Marc Randolph Learned Before Co-Founding Netflix 

As Randolph pointed out, he's been doing this "since before entrepreneurship was cool." And there were many years in marketing and other startups before he launched Netflix with Reed Hastings. In fact, Netflix was his SIXTH startup! 

Lessons From Direct Marketing 

Randolph reveals that "you’ll never know where your fascination is going to come from.” He admitted that he had no idea what it was when he was working under a CEO in a music publishing company.  

It was here that he could see several parts of the company. In Direct mailing, in particular, it all started with a fascination with two sentences in the back of a book he came across: For a list of more great son books, send a self-addressed envelope to ‘so-and-so.’  

He knew it was that job he wanted to do for some unknowable reason. He continues by saying, “It spoke to me. So, certainly lesson number one was that what was important was how you figure out how to get customers to respond.” 

Secondly, measurement was important. Having that outlook on what worked and what didn’t allows you to “avoid all that arguing about what’s better, [and] what’s not better because the numbers would tell you that.” 

Ideas Don’t Always Come From Trends But Rather Experiences 

Randolph knew early on, when the internet was first becoming a thing, that there was much potential to tap into online with direct marketing. It was an opportunity to improve personalization. Way before Netflix, he was already fascinated by what could be. 

He recalled saying early on, “My next startup is going to be an eCommerce startup.” He explained that this isn’t because he was looking for the next hot trend, but because “I spent so many years immersed in direct response that I saw the capacity that the internet had to do something powerful.” 

How Does Netflix Relate to Randolph’s Early Years in Direct Marketing? 

Although most of us today know Netflix as it is today, it didn’t start as an industry-leading streaming platform. In fact, Randolph covers how he just wanted to sell something online. So, he pitched everything from personalized shampoo and sporting goods to custom dog food.  

“I didn’t really care what it was,” Randolph added.  

However, the winning pitch during a commute was “doing video rental by mail.” It was “years and years away” from today’s streaming. Instead, you would go online, pick a movie, and it would be mailed to your door in about 2-3 days.   

While it was a ‘ridiculous’ idea, there were a lot of flaws in Blockbuster, such as late fees and the ease of finding movies you want. You couldn’t put one film in two different categories in-store, but you could online.   

Although the true breakthrough wouldn’t come for another year and a half, it would ultimately take off when DVD player companies would partner with Netflix to give customers free online rentals with a purchase. This allowed them to learn more about their audience when they signed up.  

An Entrepreneurial Leader Has a Predisposition to Action  

There’s no way of knowing if all your ideas will work out, BUT an entrepreneurial leader will take that risk anyway. The concept is that ”the only way you’re going to find out is by doing it... They don’t argue about if it is good or bad. They don’t try to do more research. They don’t try to form a task force. Their thing is, ‘how can I quickly test this?’” 

This is a significant difference between startups and larger companies. Larger companies get punished, so there isn’t much room for these big risks — and ultimately, big rewards.  

“Yes, of course, they make fewer mistakes because they study the problem to death. But, as a result, they move very slowly. And when they’re trying to do something that hasn’t been done before, they end up being late to the party.” And this isn’t just by weeks in some cases. It’s often by quarters or years! 

Today’s Entrepreneurs VS. Randolph’s Earlier Years as an Entrepreneur 

Netflix is far from Randolph’s only success as an entrepreneur, from founding or co-founding more than a handful of successful startups to helping hundreds of early-stage entrepreneurs. He has even done a lot to support the entrepreneurial community.   

So, what has changed since he began his journey as a successful entrepreneur?  

He explains how remarkable it is because “when I started, entrepreneurship was not a thing.” Sure, there were some, but people didn’t throw the name around much or highlight it in the media. There weren’t even University majors for it.  

“This career that used to be these driven, crazy people who couldn’t hold a regular job. It’s now something a lot of young people aspire to. Which, I think, is fantastic. Before, you would fight a lot of pressure to start up something new while it’s more socially acceptable.  

There’s also this ‘tremendous amount of knowledge’ on the subject today to help between blogs, books, classes, and more. While you would have to figure it all out by yourself before, you can start much further ahead today.” 

The Biggest Difference  

Above everything was the need to build everything from the bottom up by yourself. This includes sites, payment methods, etc. In fact, it took Netflix six months and a million dollars to do all this. In contrast, entrepreneurs can enlist companies to take care of each component today.  

Company Culture: Be Prepared To Do It 

“It's not what you say, [people] watch what you do. Too many companies think ‘let's sit down and design what we want this company to be.’” While that's wonderful, "it means nothing if you're not actually prepared to do it. Or, not actually doing it."  

If you're not hiring according to your culture or firing 'the asshole,' you're not walking the walk. And you can't just disguise the firing with lies like they decided to move on for family reasons. "What a waste of an opportunity to tell the whole company here is what was happening that we found distasteful."   

Netflix, for instance, has a very different culture. "Not because we put together a big culture deck — just because of how Reed and I treat each other, how we treated our early employees, and how our early employees treated each other." That's where it came from. It made them walk the walk and "recognize when we would say one thing and do another and be prepared enough to do something about it."