Netflix Co-Founder Marc Randolph Explains the Backstory Behind His New Book, “That Will Never Work"

Marc Randolph is an entrepreneur, CEO, keynote speaker, and mentor, where his entrepreneurial career spans over four decades. He is best known for laying the groundwork of the biggest online television and movie streaming service in the county that would forever change the way we view content and online media, where he later retired from the company in 2003. Since leaving Netflix, Randolph has gone back to his entrepreneurial roots, where he has founded over half a dozen successful startup companies and serves on the board of directors for companies such as Chubbies Shorts and the National Outdoor Leadership School. His national bestseller: That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea is out now to show readers of all ages that anyone can turn their dream into a reality through hard work and perseverance. I talked with Marc about his reasoning behind leaving the company, the keys to being successful, and much more: James: You grew up in a household full of overachievers. How did they influence the person you are today? Marc: I'm not sure I would consider my family as overachievers, but they certainly were supportive of my risk-taking. From the very beginning, even the craziest sounding ideas were greeted with "you should try it", or "that sounds interesting", rather than "why would you waste your time on that," or "be careful". James: What was the best advice you received from your parents? Marc: Perhaps the best advice I got was from my father when he told me that I should start my own company, rather than work for someone else so that I could have more control over my life. I'm not sure it was imperative to do it, but it certainly meant that it was permissible. James: How did you and Reed Hastings meet? Marc: Fortunately, the company that Reed had founded and was running at the time, decided to acquire the tiny 12-person startup I had helped start. The rest of them formed a business unit and were consigned to a warren of offices in the basement. I went to work directly for Reed. James: What were your initial thoughts on him? Marc: It was immediately clear that in some ways Reed and I were very similar – in our fondness for direct communication, in being relatively ego-less, and in an appreciation for data in decision making. But in other ways, it was clear that Reed was a very different beast than I was used to working with. Rather than one of us choosing the other, it was more like fate thrust us together when shortly after joining Reed's company, both of us were "made redundant" when our company was acquired by an even larger company. James: What's a crazy story you have for us that happened along the way of building Netflix? Marc: That's a story that transcends a paragraph or two, but all the stories from the early days of Netflix are captured in my new book, That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea. In the book, I talk about the carpool where the idea for Netflix was sparked, the nimble team we put together to take the idea off the ground, and all the unexpected things that happened along the way. James: Early on in the process, Amazon offered to buy your company out. Why did you decide to decline? Marc: We were only a few months past our launch date, so In some ways, the fact that Jeff Bezos was potentially interested in acquiring us was very validating. I named my book That Will Never Work because that's what everyone told me about the idea of renting DVDs by mail. If Jeff Bezos, the king of e-commerce at the time, was seeing the potential in what we were doing, then there was something worth continually working towards.

But in other ways, both Reed and I thought it was too soon to sell the company. We mistakenly thought that most of our hard work was behind us. We felt as if we had been building something from scratch and had just gotten it to start – we weren't quite ready to hand the keys over to someone else. James: What do you predict would have happened if you would have accepted Jeff's offer? Marc: It's hard to say what would have happened if we had sold back then, but I can confidently say that the media landscape we see today would be vastly different. Maybe people would be asking each other to Amazon and Chill? James: What were your biggest setbacks in building the company and how were you able to overcome them? Marc: When you're building something from scratch, everything is a struggle. There are hundreds of setbacks. From day one, we started finding that most of our assumptions were wrong. Just to pick one, when Reed Hastings and I first tested the idea of mailing DVDs to people, we simply mailed a CD in an envelope to Reed's house, and it got there in one piece. But it turned out that this was a fluke. When we went to begin mailing DVDs for real, they were breaking, they were jamming the machines and were costing twice as much as we expected to mail.

It ended up being more complicated than we ever imagined designing an envelope that could protect the DVD, serve as a return mailer, not get stolen, not get mangled, and do all of that for the price of a single postage stamp. After countless test runs, we finally found a way to mail DVD's and then we were off to the races. James: What was your reasoning behind leaving the company? Marc: As you get older, if you're lucky, you answer two important things about yourself; what you like and what you are good at. In my case, it's the same answer for both questions: early-stage companies. I like the special challenges of building something from scratch with a small team. I love the excitement and camaraderie that comes from sitting around a table with really smart people, solving really interesting problems. For years, that's the thrill I got from Netflix. But as years went by, as Netflix had its IPO, as it figured out a repeatable scalable business model, as we could afford to hire world-class people to help us, I realized that my feelings for Netflix had changed. I still loved the company. I still liked fighting it's fights, solving its problems, and vanquishing its foes. But I realized I no longer loved the things I was doing. I realized that in many ways, Netflix was no longer an early-stage company and that not only did Netflix not need me the same way anymore, but I no longer needed Netflix. James: Looking back, do you have any regrets? Marc: Sincerely, I have zero regrets for having left. It was exactly the right time. Since then, the company has gone on to scale heights I couldn't have imagined. I've gotten to go back to the thing I love, starting companies. Only this time, I'm doing it as a mentor to other early-stage founders. I still get to sit around a table with really smart people solving really interesting problems, only now I get to go home at 5:00! James: You've been a founder for multiple start-up businesses. How can you tell what businesses will be successful and which ones won't? Marc: I'm proud of my track record as an entrepreneur, but I've only been part of starting seven companies – and not all of them could be considered successful. But they all have given me a good sense of what it takes to have a shot at success. The real answer is that it's impossible to tell if a business will be successful or not. Of those seven companies, two of them ended up with multi-billion-dollar market caps. Four of them had an IPO. But two went out of business. Another few struggled. Sincerely, if you had asked me before they each started, which would be which? I never could have told you. Nor could anybody else. James: What do you look for in entrepreneurs that pitch you ideas? Marc: It's impossible to know if an idea is a good one before you start, so I'm not looking for good ideas. All ideas are bad ideas. What I'm looking for is whether the entrepreneur has the persistence to keep on trying things; to figure out whythey are bad ideas. Whether they have the creativity to think of new things to test. Whether they have the charisma to keep a team together as they struggle to figure this out. James: What's the biggest mistake you see them doing? Marc: I see some entrepreneurs who are in it because the lifestyle has been so glorified. In the media, it's presented as this glamorous lifestyle; a path to wealth and fame and pitches on "Shark Tank." I see young people wanting to be entrepreneurs but not necessarily ready to put all of the work in. They are doing it for the wrong reasons. If they are looking for wealth and fame, almost all of them are going to be sorely disappointed. But if they are looking for a career where they get to spend their days doing new things, solving puzzles, and breaking new ground – it's the best job in the world. James: Your memoir That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea is out now. Why did you decide to share your story with the world? Marc: The truth is, I only started thinking of writing a book a couple of years ago when I was giving a keynote address to a conference of small-business owners. I was covering my usual topics — how nobody knows anything, and how if you want to make a dream a reality, you have to get up and just start. As I was standing there, I was thinking about how there's a lot you can do with fifty minutes, a microphone, and five thousand butts in seats. You can boil down years of your life into a couple of easy-to-digest lessons. You can get a laugh. You can inspire. But you can't tell the whole story. I wanted to give this small group of people the type of in-depth help and insight that I usually could only provide thousands of hours with the CEOs and start-ups that I mentored. I wanted to use my story of starting Netflix— the whole thing, warts and all — to show how a dream could make it from the inside of one's head out into the real world. So I decided to write a book about the thing I'm most passionate about: How to turn a dream into a reality. James: How do you balance your personal life and business life? Marc: I'm a big believer in the importance of company culture, but culture isn't what you say. It's what you do. So many people talk about the importance of balance, but most of my career I've put tremendous effort into actually modeling that behavior. For example, every single Tuesday, regardless of what I had on my plate, I left the office at 5:00 for a date night with my wife. I was fiercely protective of this time with her and made sure that I took time out of my busy work schedule to maintain my personal life. So many people build their careers at the detriment of their home life, but I knew that I didn't want to be on my sixth successful startup and my sixth wife, so I made both a priority. James: What's something that you wish most people knew about you? Marc: If there was one thing I wanted people to know about me, it's that I'm no different than they are. If they have an inspiration, a dream, an idea . . . nothing is holding them back from pursuing it. They are probably smarter than me, probably work harder than me, and almost certainly are better prepared than I am, but I managed to muddle through okay. The biggest barrier facing anyone with a dream is having the courage to just start. That's something anybody can learn to do. James: What are the keys to being successful? Marc: Simply define success correctly. If you are defining success as money or fame, then I have no idea. But for me, success has always been whether I could spend my time doing things that I enjoy and that I did well. Anyone can find that kind of success. And if you can do those things while staying connected to your friends and family, and having the time to pursue the other aspects of your life that make you whole – those are success bonus points. James: What pieces of advice do you have for young entrepreneurs? Marc: Two things: first, and most importantly, you have to start. If you keep your idea in your head where it's safe and warm, you'll never figure out what's wrong, you'll never achieve anything. You have to take your idea and collide it with reality as soon as possible. That's the only way to learn. If you don't start, you'll never get there. Equally importantly, I always remind up-and-coming entrepreneurs that most of what an entrepreneur does is hardly glamorous. It is a disciplined reputation of tests and trials to try various propositions. To some of us, that's the great part about being an entrepreneur. If you make money - it's a bonus. If you cherish the problem solving – the chance to try to do things that everyone tells you will never work – you'll always be happy. James: Where do you see the streaming industry in five years? Marc: That's impossible to say, but I am hopeful that we will continue to see more and more options for consumers. I love that there are now so many opportunities for people to consume content and I'm eager to see how the streaming industry continues to grow. James: What are your goals for 2020 and how are you hoping to achieve them? Marc: Inspire at least one person to get off their ass, take their idea, and do something. Hopefully, this article can help with that.