Marc Randolph believes that the art of entrepreneurship is not taught, but learned through experience and pairing learning with risk.
Randolph, a co-founder and the first CEO of Netflix, joined Bill Turpin, associate vice chancellor for economic development at the University of Missouri, for a conversation about what it takes to make a “binge-worthy company.” Randolph shared his story with MU students in a webcast, offering advice about confidence and workload management.
He is a believer that all ideas have flaws, and that it can be disappointing when ideas don’t work, but his motivation is the excitement of finding something else to try.
“It’s hard to pick yourself up after an idea fails, so the thing I’ve trained myself is that you fall in love with the problem, because the problem never goes away,” Randolph said during the Sept. 29 event.
All of a sudden, the pain of the failure is forgotten, and it becomes easy to get caught up in the excitement of the next thing, he said.
Randolph and his business partner Reed Hastings went through hundreds of ideas before settling on Netflix. He said they spent months brainstorming ideas back and forth.
“Some of them were as ridiculous as video rental by mail ended up being,” he said. “One was personalized shampoo, where you cut off a lock of your hair, and you mail it to us. Then our team of ace hair scientists, whatever that is, formulate the custom blend.”
At first, Randolph said he had little confidence in his business because it was hard to test whether the fundamental premise would actually work. He said every entrepreneur gets to a point where they have to make a decision about whether to move forward or not, and sometimes the decision is based on incomplete, inconclusive or even contradictory information.
“That’s what separates an entrepreneur from other people, is this predisposition to action,” Rudolph said.
There is only so much research an entrepreneurs can do to predict if a business will succeed, he said, and the only way to truly figure out what lies around the corner is to jump in.
“All entrepreneurs want to do is keep the idea safe in their heads where it’s warm and comfortable. And it can grow into the big multibillion-dollar company, you envision,” Randolph said. “But it’s only once you bring it out of your head and collide it with reality that you realize I was wrong.”
Eventually, Randolph and Hastings reached that point with Netflix.
“We wrote a check. I leased an office. We hired a dozen people, and we spent those six months building this simple little e-commerce website that, you know, any of your students could probably do in a couple hours,” Randolph said. “In April of 1998, off we went.”
He said being an entrepreneur is an exceptionally lonely profession because founders are solving problems all the time, and constantly arguing with yourself can become myopic. He strongly recommends building a team to enforce the voice behind the idea.
“When you have one more person in the room who understands the problem as deeply as you do, and is as invested in success as you are, not only can you divide and conquer, but you have two people who are batting around an idea,” Randolph said. “And, just like diversity, it is such a powerful force by bringing in opposing viewpoints.”
When Randolph and Hastings were pitching the idea of Netflix, they were repeatedly told that it would never work. Netflix was competing with Blockbuster, the movie rental company that, at the time, had thousands of stores around the country. Netflix was offering delivery by mail when people began to switch from DVDs to online streaming.
“The challenge here is how do you build a company, which works in the here and now?” Randolph said. “It worked at the moment when video rental was done on DVD, and was going to work for the foreseeable future, but our plan had to change as entertainment transitioned to downloading or streaming.”