Show Notes

In this episode, we sit down with That Will Never Work author and Netflix co-founder Marc Randolph to uncover the real story behind Netflix’s journey from a scrappy DVD rental startup to a global streaming giant. Marc shares candid insights on entrepreneurship, failure, and the pivotal role of serendipity, iteration, and resilience in building a billion-dollar company. He also debunks the myth of the "eureka moment" and reveals how Netflix’s iconic recommendation algorithm had its roots in old-school video store wisdom. If you think success is a straight line, think again. 🎧 Tune in for an honest, funny, and eye-opening conversation about what it really takes to turn an idea into an industry disruptor.

About Marc Randolf co-founder Netflix

Marc Randolph is a veteran Silicon Valley entrepreneur, advisor, and investor, best known as the co-founder and first CEO of Netflix. With a career spanning over four decades, he has founded or helped launch more than half a dozen successful startups. As an early advocate for disruptive innovation, Marc played a key role in shaping the online streaming industry. He is also the author of That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea, where he shares insights into entrepreneurship, resilience, and the reality of building a billion-dollar company. Today, Marc is a sought-after speaker, mentor, and advocate for startups, guiding the next generation of business leaders.

Transcript

**"That Will Never Work: The Scrappy Beginnings of Netflix"** ### **Podcast Host:** Welcome to *[Podcast Name]*, where we dive deep into the stories behind the most groundbreaking companies, ideas, and innovations. I'm **[Host Name]**, and today, I have the pleasure of speaking with **Marc Randolph**, the co-founder and first CEO of Netflix, and the author of *That Will Never Work*. Marc, one of the things I love most about your book is your voice. It’s so authentic—it’s raw, it’s genuine, and at times, even profane—but it’s real. What was the impetus behind writing *That Will Never Work*? After all, you had left Netflix quite some time before writing it. ### **Marc Randolph (Guest):** Yeah, this book came out **16 years after I left Netflix**, so if I had just wanted to tell the Netflix story, I would have done it much earlier. But it took me a long time to **put it all in perspective**—to be honest with myself about what went well, what didn’t, where I screwed up, and what my real role was in it all. I wanted to tell the story of Netflix because most people think it **sprang forth fully formed** as this **streaming giant**, but that’s not how it happened. There was a long period where we were just struggling to survive. We started in a tiny office—not much bigger than this one. And for anyone imagining this, let me tell you, **it wasn’t this nice**. Our carpets were disgusting. But I also realized something in the years since I left: **The lessons I learned about entrepreneurship aren’t just for startups trying to build a streaming empire**. They apply to **anyone with an idea**—whether you’re launching a tech company, a small business, or even just trying to make something new work. It’s all about **iteration, testing, and focus**. ### **Host:** And that’s something I want to dig into because the **Netflix story isn’t just about one big idea—it’s about the journey.** But before we get deeper into that, let’s go back to **your early ideas**. You had a ton of them at one point, and you would pitch them to **Reed Hastings**, Netflix’s co-founder, while carpooling with him. Reed, if I understand correctly, would shoot **almost every one of them down**. And some of these ideas were pretty… out there. One of my favorites? **Personalized shampoo.** ### **Marc:** [Laughs] Yeah, **I’ve always been wired that way**. I see the world as an **imperfect place**, but instead of just complaining about it, I see **opportunities**—problems that need to be solved. Ideas, for me, are like **a box of abandoned puppies**. You walk past, and at first, you think, *Huh, that’s weird*. Then you realize, *Wait, I can’t just leave them here*. And before you know it, you’re **fully invested**—you’ve picked it up, taken it home, and now you’re in deep. And ideas **evolve**. That’s one of the biggest lessons I talk about in the book. People love the **Hollywood version** of entrepreneurship—this **big epiphany moment** where everything becomes crystal clear. But in reality? That’s **not how it happens**. Ideas take time to germinate, they mix in with thousands of other ideas, and sometimes, you don’t even realize you’ve had a great one until **months or even years later**. ### **Host:** And that’s exactly what happened with Netflix, right? ### **Marc:** Exactly. The story that gets told is that Reed had a **$40 late fee** on *Apollo 13*, got really pissed off, and *boom!* Netflix was born. It’s a great story—it’s short, it’s dramatic, and it sounds like a perfect *Eureka!* moment. But in reality? **That’s not how it happened.** Netflix was my **sixth startup**. I had already run two **subscription-based businesses**. I had experience in **mail-order retail**. Reed knew **algorithms and computer science**. Another person on our team had run **a video store for 20 years**. All of those **pieces came together**—and that’s what made Netflix possible. ### **Host:** And originally, Netflix wasn’t even supposed to be **DVD rental by mail**, right? ### **Marc:** Nope. We originally thought about doing **VHS rental by mail**. But VHS tapes were **huge and expensive**—$80 to $100 per tape. And because they were so bulky, it was **logistically impossible** to ship them back and forth quickly enough to make the business work. Then, by **sheer coincidence**, DVDs were introduced in a **test market**. And that changed everything. It was like finding a **missing puzzle piece** under the couch—**something we had given up on suddenly made sense again**. ### **Host:** And even then, you still had to test whether DVDs would **survive the mailing process**, right? ### **Marc:** Yeah! Reed and I were **commuting to work**, tossing around ideas, and when we thought of DVDs, we **turned the car around**, went to a music store, bought a **used CD**, and then went to a **gift shop** to get a greeting-card envelope. We **mailed it to Reed’s house**, and when it arrived the next day **in perfect condition**, we thought, *Great! This works!* What we didn’t realize? **That envelope never went through the real postal system**—it was delivered through **local mail sorting** instead of being thrown into the industrial machines that shred most delicate packages. If it had gone through that? Reed probably would have opened it up and found nothing but **plastic shards**—and we might have **killed the idea before it even started**. ### **Host:** Talk about **accidental validation**. So you launch Netflix in **1998**, and you get… what? **137 orders on the first day?** ### **Marc:** Yeah, **way more than we expected**. We had a little **computer in the office** that rang **a bell** every time an order came in. We had **champagne ready to celebrate**. And then, about **15 minutes in**, the site crashes. ### **Host:** [Laughs] Classic launch-day disaster. ### **Marc:** Yep. **Both servers crashed.** And my memory of launch day isn’t us celebrating. It’s me at **Fry’s Electronics**, pushing a shopping cart **full of memory chips** to try and get the site back up. ### **Host:** Fast forward a bit—you’re running Netflix, and then **Reed Hastings asks to take over as CEO**. ### **Marc:** That was one of the hardest decisions I’ve ever made. Reed came to me, sat me down, and started **running through a PowerPoint presentation** about **why I wasn’t the best person to run Netflix at scale**. I was **angry at first**, but I also knew Reed was **right**. The **best thing for Netflix** was for me to step aside and let him take over. Looking back? **It was the right call.** Netflix wouldn’t be what it is today if I had been stubborn and tried to hold onto control. ### **Host:** That level of **self-awareness** and **willingness to adapt** is rare. ### **Marc:** That’s the **real secret** of entrepreneurship. You don’t just **pivot ideas**—sometimes, you have to **pivot yourself**. ### **Host:** Marc, this has been an **incredible conversation**. For those listening, pick up *That Will Never Work*—it’s one of the most **honest, insightful, and entertaining** books about entrepreneurship you’ll ever read. Marc, thanks for being here. ### **Marc:** Thanks for having me. **And remember—ideas don’t work. People do.**