Marc Randolph on Building Netflix, Battling Blockbuster, Negotiating with Amazon/Bezos, and Scraping the Barnacles Off the Hull (#496)

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“You have to have the willingness and the confidence to walk away from sure mediocrity to bet everything on the long shot of a big success.”

— Marc Randolph

Although best known as the co-founder and first CEO of Netflix, Marc Randolph‘s (@mbrandolph) career as an entrepreneur spans more than four decades. He’s founded or co-founded half a dozen other successful start-ups, including, most recently, Looker Data Sciences, which he sold to Google in 2019 for $2.6B. He is currently mentoring a handful of other early-stage companies and advising hundreds of other entrepreneurs. He is also an active seed investor in start-ups all over the world, author of an internationally bestselling memoir, and host of the new podcast That Will Never Work, where he dispenses advice, encouragement, and tough love to struggling entrepreneurs.

When not surfing, mountain biking, or back-country skiing, Marc is a frequent speaker at industry events, works extensively with young entrepreneur programs, sits on the board of the environmental advocacy group 1% for the Planet, and chairs the National Outdoor Leadership School‘s board of trustees.

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The transcript of this episode can be found here. Transcripts of all episodes can be found here.

#496: Marc Randolph on Building Netflix, Battling Blockbuster, Negotiating with Amazon/Bezos, and Scraping the Barnacles Off The Hull
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What was your favorite quote or lesson from this episode? Please let me know in the comments.

SCROLL BELOW FOR LINKS AND SHOW NOTES…

Want to hear another episode with a paradigm-shifting entrepreneur? Listen to my conversation with Sir Richard Branson, in which we discuss clean meat, cryptocurrency, dyslexia, energy-generating habits, PR stunts, lessons learned from Nelson Mandela, limiting risk, and more!

#272: Sir Richard Branson — The Billionaire Maverick of the Virgin Empire
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SELECTED LINKS FROM THE EPISODE

  • Connect with Marc Randolph:

Website | Twitter | Facebook | Instagram | LinkedIn

SHOW NOTES

  • Here’s the story behind why I’ve taken to calling my guest Marc “The Seagull” Randolph. [05:35]
  • In his youth, what did involvement with the National Outdoor Leadership School (which he now chairs) teach Marc? Does NOLS offer such programs for adults? [10:00]
  • While discovering his own penchant for leadership, how did Marc’s communication style change? [15:27]
  • Homing in on a superpower: split testing. Where did Marc get bitten by the bug that endowed him with this ability? [18:27]
  • I share something I may have never shared with the public before, Marc explains what he meant when he said: “There’s no such thing as a good idea.” He details some of the ideas he and Reed Hastings worked on before arriving at what we know today as Netflix, and shares the test they did to determine if the idea of video rental by mail was good or bad. [21:28]
  • What were the prerequisites of the business ideas Marc and Reed threw around before arriving on what would become Netflix? [27:11]
  • What did the approach to Netflix’s iteration look like in the early days, and what, in Marc’s opinion, sets apart good entrepreneurs from mediocre ones? [32:20]
  • How did Marc and Reed overcome the temptation to gear their startup toward what seemed to work in the ’90s and what would go on to change the face of media consumption in the 21st century? [35:50]
  • Marc answers a question he perhaps never considered. [40:17]
  • How did Marc and Reed think about naming the company? What were their best and worst ideas, and how might arriving at this decision be different now versus then? [42:14]
  • Marc dishes about the time e-commerce demigod Jeff Bezos invited Reed and him to a sketchy part of Seattle for a “talk,” and how they prepared for it on the flight up. [46:19]
  • People told Marc and Reed, time and time again regarding the Netflix business model, “That’ll never work.” What were they missing? [56:09]
  • On the perfect storm of bad news that led to Marc and Reed trying to unload Netflix onto its then-biggest competitor: Blockbuster.[1:01:09]
  • Why didn’t Marc and Reed negotiate with Blockbuster for a lower buyout price when the company balked at the initial offer? [1:11:19]
  • What is the Canada Principle, and how has it guided Netflix’s unique business model in ways others might think of as leaving money on the table? What were the most tempting opportunities during this time that had to be turned away as distractions from Netflix’s main focus? [1:14:06]
  • How did Marc stick by his commitment to honor a regular date night with his wife without letting hectic startup life disrupt the balance? Has this tradition ever failed the stress test? [1:20:16]
  • What advice does Marc have for the success of couples considering instituting a similar date night tradition? [1:27:48]
  • The moment of clarity through which Marc found his purpose in life that led to writing That Will Never Work and starting a podcast by the same name. [1:30:32]
  • What can listeners to Marc’s podcast expect? [1:37:10]
  • What would Marc’s billboard say? [1:40:05]
  • Parting thoughts. [1:44:04]

PEOPLE MENTIONED

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10 Replies to “Marc Randolph on Building Netflix, Battling Blockbuster, Negotiating with Amazon/Bezos, and Scraping the Barnacles Off the Hull (#496)”

  1. Hi Tim!

    I’m a 19 year old Swede who has been struggling for years to build muscle. I thought I’d give it a new try this year and therefore started reading 4HB. I just started the regimen but I have a few questions, the most important one being:

    Is Occam’s Protocol still your number one recommendation for hardgainers to build muscle?

    It’s been a few years since the book was released so I would very much like to know what new knowledge you’ve gained since and how you would change the program to optimize it even more for quick muscle building.

    I’ve been looking for an answer to this question all over the internet but couldn’t seem to find anything. Maybe you have a resource to link me to? Or maybe you could consider updating us on your thoughts on muscle building?

    Any answer at all would be hugely appreciated. I think you have a lot of great stuff and you seem like a very genuine and cool guy.

    Love from Sweden

  2. The naming part of the conversation reminded me of when I was a co-founder of a digital media firm in the early 2000s and a major financial client had us prototyping a new service they were calling “NetShots” – powerful overviews of stocks available online. The naming was already done, so we went through design, and revisions, etc. and then shortly before debuting the service, we got a call saying the name had to change! When we asked why, they simply said “look at netshots.com”, which, as I’m sure you guessed, was already a porn site.

    I was an early, big fan of Netflix, recruiting others to become members for my own selfish reasons… I wanted Netflix to survive so I could keep using them. I wasn’t sure if they’d make the transition to streaming successfully, or die a-la Blockbuster, but clearly they were ahead of the game in that regard.

  3. Hey Tim! I’m a long time fan and have read (most of) your books and I’m an avid listener of your incredible podcast since day 1! I know this may not be a widely relevant topic for your podcast, BUT, as a sensitive Pisces woman who is interested in the relationships of top performers and how they navigate them and what they’ve learned/how they’ve grown – would you ever consider a podcast of interviewing your partner/girlfriend? I know a lot of us would love to hear about your (and her) take on what it’s been like for you to be in a harmonious relationship. Unless it’s too private of a topic, of course. Anyway, thank you for ALL you do, you’re the best!

  4. I struggled to reconcile Marc’s retelling of the Blockbuster meeting. After explaining that they were struggling to stave off bankruptcy and the only solution was to sell the company, they decided to take a corporate retreat, rent a private jet, fly into Blockbuster, marvel at the fact they had ‘extra stationary’ in the boardroom, then cruise back to the retreat in the PJ. 🤔 sounds rough.

  5. Loved 4HWW – I’m in the process of trying to design a remote business and I could use a mentor in the worst possible way > dgaf who just send them my direction

  6. Hello Tim,

    My name is Mahdi Gilbert and I am the only magician in the world born without hands and feet. I fooled Penn & Teller on TV with sleight of hand without hands. My calling in life is to inspire others and I do that through the magic that I do. I am reaching out to you because I believe your following would be inspired by my magic and my story and I am hoping you will share it with them because everyone needs hope during this long and dark winter. Here is a link to my video: [Moderator: per link policy, link removed to “Penn and Teller: Fool Us | Mahdi Gilbert Performs Sleight of Hand without Hands.”].

    Thank you very much,
    Mahdi Gilbert

  7. This episode was gold. Marc was very interesting, upbeat, and eager to share his knowledge. I appreciate your words of wisdom Marc. It is truly very helpful to hear someone with such success share that they have, in fact, had bad ideas. It gives me hope!

  8. Hi Tim,

    Thought this episode was extremely interesting. My friends and I have time and time again debated the approach to testing new ideas, where we keep getting stuck in the camps of either doing soft launches and testing if there is any market interest versus doing extensive market analysis to ensure that the product launch is targeting the right customer groups through the right channels. Thoroughly enjoyed getting Marc’s perspective on this.

    I was wondering if you in your round 2 with Marc (if incoming) or if you in any of your coming podcasts (or if you’ve already asked this can point me in the direction of these) could try to investigate the following topic:

    When do you know it is time to ‘kill your darlings’? Marc seemed to be able to pivot ideas quite rapidly with shampoo, dogfood, etc., but are there any rules of thumb, any good advise as to when you know / should realize it is time to either pivot or move on?

    Thanks and looking forward to hearing from you.