Even giants start small. 

Before Netflix became a streaming behemoth, sending shudders through Hollywood and the tech industry and competing with sleep for the attention of millions of customers worldwide, it was another idea for a business batted around by serial entrepreneur Marc Randolph and Reed Hastings, the guy who'd bought one of his startups. 

Among the other ideas Randolph and Hastings (briefly) considered: customized baseball bats, dog food formulated for individual dogs, and personalized shampoos. While the idea of a mail order DVD rental service--and later, a content streaming platform--in retrospect seems like a sure winner, when Netflix launched in 1997, it was far from it. (Even if it was a much better idea than customized baseball bats.) 

"I had no idea what would work and what wouldn't," admits Randolph in That Will Never Work, his newly released memoir. The book chronicles the early days of Netflix leading up to its IPO in 2002, including when Hastings replaced Randolph as CEO in 1999. Less a business how-to manual than an occasionally wry look back at a lark that grew into a massive company, That Will Never Work nonetheless offers many insights. 

Below are excerpts from a conversation I had with Randolph, in which we used his own thoughts as prompts. 

"Epiphanies are rare.... The truth is, for every good idea, there are a thousand bad ones."

Randolph, who'd previously started Macworld magazine and two early Apple mail order businesses, explains that while lightning bolt inspiration may sound good to investors and journalists, the origins of a company are never that simple.

"People get hung up on their idea. The biggest problem I see with early-stage entrepreneurs is they get the idea in their head, and they leave it in their head. And they begin embellishing it in their head, making it more ornate. They add on the second story to their dream house--then add the tennis court and the turrets and the gargoyles. 
 
"The reality I've learned is that the ideas don't count much at all, because ideas are just starting points. The trick is saying why it's a bad idea by immediately colliding your idea with a real customer, getting that real feedback about what does the market want, what is gonna work? At Netflix, that was the pattern. We tried hundreds of things and little by little we accumulated the knowledge about understanding the product, understanding the market, understanding what customers wanted."

Looking for a few examples of bad ideas turned good? Here are some names Randolph and his team were considering before landing on Netflix: TakeOne, NowShowing, E-Flix.com, Netpix, and Webflix.

"I kept a little notebook of ideas in my backpack and carried it with me everywhere I went."

This is the same advice every young writer gets: Carry a notebook and a pen with you everywhere you go. 

"I'm definitely a note taker. I use paper, still. It's ubiquitous, it's always available. It's a little bit less obtrusive. When you're in a meeting and you pull out your paper notebook, people look at you and go, 'Oh, he's taking a note.' But if you're in a meeting and you pull out your iPad, they go, 'Oh, he's checking Facebook.'

"Culture isn't what you say. It's what you do." 

"People have kind of gotten it in their minds that a corporate culture is important. They're well-meaning, and they'll sit down and say, 'What should our culture be?' And they'll create this aspirational document, which is usually complete BS. Fundamentally, culture is not what you say, it's not what you write down, it's not what you carve into the cornerstone of your building. It's how you act."

"When an opportunity comes knocking, you don't necessarily have to open your door. But you owe it to yourself to at least look through the keyhole." 

Jeff Bezos invited Randolph and Hastings to Seattle to talk about a possible acquisition in 1998. It's hard to imagine what the streaming terrain would look like today had Bezos scooped Netflix, but there was a moment when Randolph and Hastings at least considered it.

"On one hand, this was tremendously gratifying. Don't forget this was a business founded on a crazy idea! This was an idea that everyone was telling us, 'That will never work.' We're only a handful of months into this great experiment, and here's Jeff Bezos. Here's the pioneer of e-commerce interested us!

"The bigger thing that we took away from that trip to Seattle is that it was like a commitment ceremony for Reed and I. It was looking each other in the eye and saying, 'Are we in?' We were just getting started."

"You'll learn more in one hour of doing something than in a lifetime of thinking about it."

"Life is lived forward and reviewed backwards. That's why it took me 16 years to write this book. Netflix was my sixth startup. I learned more after leaving Netflix and working with so many other early-stage entrepreneurs making their dreams come true.

"The single most important thing you can do to make your dream come true is to start."

Published on: Sep 18, 2019