447 - This Netflix Co-Founder Turned His Idea Into A Company Worth Over $100 Billion | Marc Randolph

0:00First, you talk about this notion of distrusting epiphanies, that when they appear in origin stories, they're either oversimplified or just plain false, that the real story is a lot more complicated than that realist. Why is this truth so important for all entrepreneurs to understand? Well, first of all, I'm glad you went through the book so quickly. I think it's kind of appropriate that a book about Netflix would be bingeable. I think that was kind of one of those subtle things you're aiming for when you write a book. No, but seriously, unfortunately, there is a tremendous amount of myths about entrepreneurship and about startups and about companies.

0:36And one of the big ones, as I do mention in the book, is the epiphany story, which is that belief that somehow these great ideas all of a sudden spring forth fully formed in some eureka moment. It's the moment that all becomes clear. Because those stories do resonate with us. There's the classic, what is it, Airbnb, where they can't make their rent. and okay, we're going to put an air mattress down in our spare bedroom and boom, there's Airbnb or Travis can't get a cab on New Year's Eve and boom, there's Uber or late fee at a movie and boom, there's Netflix. But the reason is it's not like that, that the patrimony of an idea is really complicated.

1:24There's lots and lots of people involved, each contributing little bits. And there's huge dead ends, false starts along the way. And that's what I wanted to tell in the book was that this is a complicated process that's fun, that's scary, that's interesting. That's not just, boom, we're finished. That's right. And knowing that truth, I also found it so reassuring because having the emotional truth of a narrative that is easy to tell in the media or easy to tell to investors or easy to tell to friends and family or even potential customers, it's like that's valid too. And so I loved being able to see both sides of that.

2:10You know, like when you're trying to get something off the ground, you don't know what the hell it is, but it starts sounding good and you've got a soundbite. It's like, yeah, it's okay to use it, but you don't want to fall into the notion. And I think I've seen this a lot with folks in my audience. I've certainly tortured myself with it with different projects. I'm like, this should be going faster, right? Like this should be a little bit easier. At least that's the voice in my head that sometimes comes up. But I think both are true. Like, have you seen in some of your other companies or even as you're advising entrepreneurs that, yes, the myth is there, right?

2:42It's going to take time, false starts. It's not going to happen necessarily in a, you know, angels kind of coming out of the clouds and oh, kind of moment. But do You also advise entrepreneurs to kind of whittle down an origin story so that it is retellable, that it is shareable, that it is kind of iconic or legendary. Yeah. Well, you may notice that I didn't call these origin stories fake or disingenuous. That's right. And when people take them literally, yes, of course they go, oh, you're lying. It didn't really happen that way. But what you learn, especially if you begin telling the story over and over again, is People really don't want to hear 356 pages of where this idea came from.

3:22That's right. And their eyes glaze over. And so quickly you realize, no, they just need something quick and pithy, which is emotionally true, which communicates what is the purpose of this? What were we trying to solve? What was our dream? Yeah. And then you get on into the reality of what's going on. So it's all the time. You need to have a narrative. You need to have some way of expressing what your vision is because that's what is the magnetic force field that aligns everyone who's working with you, that they're all pointing in the same direction, even if they're not necessarily being able to see which direction you're going.

3:57And that comes from having this clear narrative. And if the narrative you're telling the world is the exact same narrative you're telling your own team and they're telling yourself, well, that's the sign of a really, really good one. So you shared that Silicon Valley brainstorming sessions often begin with someone saying, there are no bad ideas, but you've always disagreed. There are bad ideas, but you just don't know an idea is bad until you've tried it. And I love that because in our company, we're constantly brainstorming. And I call it throwing spaghetti at the wall because I'm Italian and I like spaghetti.

4:30And it's like, you kind of do have to go through all the ones. So Netflix was your fifth company. After Business 4, you were coming up with a ton of bad ideas, so to speak, right? Like there was baseball bats, surfboards, personalized shampoo, even dog food. And when you eventually stumbled upon videotapes and then eventually DVDs, your mom even said, right, that'll never work. So I want to know if you have any advice for how to discern if our big idea is really kind of a bad and sucky idea, or maybe it's just not there yet? Well, I can shortcut the process entirely for you and for everyone who's listening, which is it's a bad idea.

5:12I mean, I know it's, I haven't even, you know, wait a minute, I'll put on the, all right. Oh yeah, yeah. It's a bad idea. And the reason I'm so, I'm so confident that it's a bad idea is because every idea is a bad idea. I mean, as you mentioned, you know, every brainstorming session, no such thing as a bad idea. Well, BS, they're all bad ideas. But that's a critically important thing to understand because you cannot hold on to this precious gem, this golden child of an idea, and keep it in your head where it's safe and warm and build it all up only to collide it at some point in the future and realize then it's a bad idea.

5:50The truth that comes from realizing that all ideas are bad ideas is that the only way to figure out what's wrong with it, the only way to get that little insight that leads you to your next idea, the only way to eventually shift and pivot and change to get to a company that actually works, or forget the company, to get to something that actually works is starting, is taking that bad idea and colliding it with reality. And, you know, I've been doing this for 40 years, and this thing that I've learned is that I don't care about your ideas is because I'm not looking for how good your idea is. What really separates a great entrepreneur is their ability to be creative enough to come up with a quick, cheap, and easy way to test it.

6:37Yes, amen. That's what entrepreneurs does really well. That's right. This is like, it's a Thursday when we're recording this. It'll probably be a Tuesday when it comes out, but I'm saying amen because we are in business church right now. And I know you also wrote too, I'm gonna say this. I'm gonna take it out. Hallelujah. Hallelujah. We are in the hallelujah zone. In fact, you know what? Are you drinking tea or coffee? You're making me want mine. I can't tip it up. It's a cappuccino that I make every morning down with my ridiculously over-the-top espresso machine. I love that. And I often say, as a writer, this is basically my gift when I'm writing.

7:14It's just channeling caffeine into words. That's basically all I do. and I have... It's a new form of alchemy, isn't it? It is. It's a form of alchemy. I'm like tapping into the nectar of the gods and just channeling its wisdom onto a page. This one, I have... I've got a different thing going here, Marie, which is that basically my motto is, why do something when you can overdo something? This is why I knew we were kindred spirits and And I know our mutual friend, Heidi, she's like, you guys got to know each other. I was like, yeah, I have a feeling about this. It was good. That's been the story of my life.

7:54It's like too much, Marie, too much. I'm like, what are you talking about? This is how I came out. It's always too much. Exactly. So, okay, moving on. Follow up that many entrepreneurs have like this particular question. How do I know when to give up on an idea? We've already established the idea is probably sucky. It's scrappy. It sucks. But let's say they've been going, they've been pivoting, they've been trying, they've been testing, they've been, you know, kind of making these alterations and these tweaks. And they're thinking to themselves, should I just accept the sunk costs? You know what I mean?

8:33And say, okay, this one was really a not working thing. I'm not going to give up totally, but maybe just this idea. What's your perspective there? See, you phrased it an interesting way, which is when do I know when to give up on an idea? And I like that you phrased it that way because it allows me to answer it really easily, which is as soon as you realize it's not a good idea, which you do not hang on to an idea. This big rule is do not fall in love with your idea. Fall in love with the problem. That's a different thing altogether. other. Because the idea, despite the fact that you think it is going to grow up to be a Heisman Trophy winner or a Nobel Prize winner, the ideas may end up doing crack behind the 7-Eleven.

9:15And you just don't know that until you try it. So the trick here is give up on that, but don't give up on the problem because the problem will get richer, more nuanced. You'll understand it better. You'll understand the customer and what they really need. Because each of these failed ideas is making the problem closer to being solved. But I don't want to pounce on words as a way to weasel out of answering the hard question. And what you're really saying is, when do I know when to give up? And I don't know because I'm not wired that way and most entrepreneurs aren't wired that way. We give up when someone forces us to give up, when we run out of money, we run out of time, when it's so completely self-evident, this is not going anywhere and something else has my attention.

10:07It's more shifting tracks than it is giving up. And I just fundamentally believe that as long as it intrigues you, you keep going with it. And eventually you figure it out. But this ties into something deeper and I won't go too much time on it here, but it depends on what you're looking for. And I think we started off this entire segment about talking about a lot of the myths surrounding entrepreneurship. And I think a lot of people get into this because they believe, oh, I'm going to be rich or I'm going to be famous. And if those are the things you're looking for, you may as well give up now because it's extremely unlikely those things will happen.

10:51If you're saying, I just love this problem solving. I love doing something different every day. I love working with interesting people and solving really hard puzzles. Then this whole idea of failure and success are different because as long as you're coming in every day and getting to work on that problem, well, you're being successful. That's right. And by the way, my show, my rules, as long as you got time, I got time. So we can go as long as we want. We can go as deep as we want. I was really, really psyched for this one. And I want to stay here for a moment because I actually want to talk about something I read on your blog.

11:27And it was the thing, Mark, that made me reach out to our mutual friend Heidi. And I was like, I've got to have Mark on the show. Like now I want to talk about this. So you wrote this very short blog and it was very powerful. And I shared it with my team about when you visited a friend in Paris and you were talking with her French husband who has a small import business selling gloves from Switzerland to high-end retail stores. And you had all kinds of advice, right, for all the things that he could do potentially to grow his business. And he was like, not having the advice from Mark Randolph.

12:03He was like, no, sir. And he actually said to you, stop. Why would I do any of the things that you're suggesting? So I'm wondering if you could tell us more about that story, why your friend's husband was like, uh-uh. And the point of that blog that you really wanted to share. Yeah, it was kind of a revelatory moment because I'm so used to talking business and getting all excited about all the different ways you can grow and try and expand. And this friend of my, my husband and my friend was having none of it, having this puzzled look, which I assumed was a language barrier. You know, so I slowed down and used more hand gestures.

12:43And finally, I could tell, you know, he was starting to laugh because his comment was, as you said, why would I want to do any of that? He goes, I've got a great life. We have an apartment in Paris. We have a small place in the south of France. I take off five weeks every summer. I bridge my weekends many other times during the year. Why do I want to keep pursuing more and more and more at the expense of this wonderful balance of life that I have? And it was just a really interesting reminder that balance is probably more important, at least for me, than economic success. I mean, there's always more.

13:23But at some point you say, this is what I am now is pretty darn good. And then the struggle becomes, how do you maintain that? And I really kind of was, this is a long time ago, but it really opened my eyes that you could think about this world very, very differently. Yeah. And I'll tell you, I had so many times, I've been in business for about 20 years now, and I remember maybe it was around like the 12-year mark or so, and I was invited to this event. And it was at, gosh, I think it might've been at either Fortune Magazine or Forbes or something. I don't remember the exact one. Anywho, cut to the fact.

14:05There was a bunch of us being introduced around the table. And it was like, oh, Marie Forleo, she's just a lifestyle entrepreneur. And Mark, I will tell you, it felt like it was like a poo-pooing. You know what I mean? And the person that was leading this particular kind of event, he was an employee of the magazine. And I remember thinking to myself, and this is Jersey Marie coming out at the time. So just a little bit revealing of my alter ego. I was like, who the hell is this clown? From a financial perspective, I can guarantee I'm running circles around you. But I remember feeling offended.

14:41I felt shame. I felt like I wasn't a real entrepreneur because I wasn't going out necessarily raising venture capital or wanting to grow at these hyper speeds. And it was a real experience for me to go like, but I don't want venture capital. The whole reason I got into running my own business is because I'm a human being who values freedom more than anything. And I love making a difference to people, but I also love doing it in my own way. And I have a very unique, quirky kind of vision for how I want that to come to life. So I just wanted to share that because for you, and I so appreciate and respect not only everything that you've built, but how much you love solving problems and how much you love supporting entrepreneurs and making their ideas a reality.

15:28And I just loved this blog because it It was another underscore of there's many different ways to play this entrepreneurial game, right? Can I talk a bit more about balance then? Yes, please. Only because when I was probably in my late 20s, I was living with my girlfriend at the time and I was working like crazy, working weekends, working nights, not because I had a slave driver of a boss, because I loved what I was doing, deeply passionate, couldn't wait to get to the office every day. but I had this revelation that I was working all the time and my girlfriend was basically getting the leftovers.

16:11And it dawned on me, or maybe it dawned on me when she began hitting me about the head and shoulders with a stick, that this was not the basis for a sustainable relationship. And it kind of marked this moment where I said, if I want to have some balance in my life, I have to make, I have to prioritize that. And for me, that balance has been tricky because there's actually a third leg to that stool, which is that these, the personal, the things that makes me whole as a person that really brings me the great joy is being outdoors. And I don't mean walks around the park. I mean, going out and mountain biking or backcountry skiing or canoeing a wilderness river in Alaska.

16:55I mean, these are not the types of events that you can fit in between a noon call and a two o 'clock meeting. And so if I was going to make all this happen, be an entrepreneur, which is what I love doing, but maintain this relationship with my best friend and be able to feed that part of my soul that needed the outdoors, I was going to have to make that the highest priority. How do you do that? How do you fit all those three things together? other. And I have to say that has been the focus of my life, much more so than I'm going to create the, disrupt the streaming world, or I'm going to make big returns for shareholders.

17:38It's not. It's can I do this thing I love, which is starting and building companies at the same time that I can have a family and that I can get outside and enjoy the outdoors. You know, and looking back, I'm proud of the business success. You know, certainly I've had$2 billion plus companies, had three IPOs. Certainly from any scorecard, I've done great. But the thing I'm proudest of is the fact that I was able to do those things while staying married to the same woman for 35 years and having my kids grow up knowing me and best I can tell liking me and getting out and backcountry skiing and mountain biking and kayaking and surfing.

18:24That is the thing that I'm proud of. And do you want to say anything? Because I can hear my audience after, again, doing this so long, I hear questions in advance. So I'm going to serve them up to you. And they're going to be like, Mark, tell us the secret. Tell us, Mark. Is there anything that you want to say about whether it is mistakes that you've made in the past in the quest to have that integration or anything that you've discovered that's worked for you that you're like, wow, this is something that has consistently enabled me to feed those three areas, even though I'm sure the ratio has always changed.

19:02It's always going to be a dance, different seasons of life. Anything you want to say about the how or the tactics? Sure. I mean, the underlying, the fundamental principle is if you don't know what you want, The odds are very slim you're going to get it. And the first part is deciding that this truly is the most important thing to you. And not paying lip service to it, not saying, boy, it'd be great if I spent, but saying, no, I'm, well, in my case, I'm 30 years old. I have a bunch of years to do this. This is important to me. And then actively doing it. And if you think it's easy, I can tell you it's really, really hard.

19:43I work really, really hard at it. Like I said, that's been the top objective of my life for the most part is balancing those three things. But let me give you an example. And this is kind of, I've talked about this before, but when we were starting Netflix, before I started Netflix, I had this principle that I said, okay, we're having one night a week at least where I'm going to leave the office at five. We're not going to have phones. We're going to get a sitter for the kids. And we're going to go out and have a night for the two of us. And if you, listen, you've run a startup before. You know that things don't tie up nice and neat at 5 p.m.

20:24But I was adamant. I said, if there is going to be a crisis, we are going to wrap it up by 5. You need to talk to me? Fine. We're going to talk on the way to the car. But this amazing thing happens after you do this for a few months It's like I don't know how it could be but the crises stop happening after 5 o 'clock p.m. on tuesdays How could this be and more importantly i'm a big believer in culture and how important culture is to a company And culture is not what you say. It's what you do And I could talk till I was blue in the face about how important balance is and we need to make sure we have another life besides our work life.

21:03But nothing says that more strongly than watching the boss walk out of there at 5 o 'clock PM every Tuesday. And that was perhaps even the more powerful thing is because then you begin seeing other people carving these times out of their life. That's right. And date night is easy. Imagine I'm going to go up and kayak the No Attack River in Alaska, which is 10 days to two weeks. Carving that time out when you're running a company, You know, there's an advanced maneuver. Did Reid ever say to you, like, what are you doing, Mark? Like, you need to be here, X, Y, and Z. Or did you guys just have an understanding that he knew who you were and you all knew each other from the previous company and from always working together?

21:45Like, was that ever a friction point? It's deeper than that, Marie. You've touched on a key aspect of a culture I've always had in companies that I've been part of and certainly permeated Netflix. and it's that thing they call freedom and responsibility, which is, I don't care where you are, when you are, whether you're in the office or not, that's not what you're here for. But there are certain things that you're responsible for, which I expect you to get done. And since you said, I have all the time in the world, I'll tell a quick story about that. And this is when I was running a company and one of my engineering managers, the person who is supervising the programmers, comes in and goes, Mark, I've got great news.

22:31And I go, what? He goes, I'm in love. And for engineers, of course, that is great news. But he goes, but, and I go, okay, there's a but. And he goes, yeah, she lives in San Diego. And he's up here in the San Francisco Bay Area. And I go, okay. And he goes, so I've got a proposal. What I'd like to do is leave work at four or five on Thursday, and I'll fly down to San Diego, and I'll work from there on Friday, spend the weekend. I'll work from there on Monday, come home Monday night, be in the office Tuesday morning. He goes, what do you think? And I go, well, let me parse this out. So if you're asking me if it's okay for you to go down and spend, you know, four days a week in San Diego and three days a week here, fine.

23:13I don't care. You can work on the moon for all I care. That's not what's important. But if you're asking me if I'm willing to lower my expectations of you to change the things I expect you to get accomplished? Well, that's easy because the answer to that is no. And so if you think you can, you're an engineering manager, people report to you. If you think you can do an effective job not being here two days out of the five days of the week, well, all power to you. You're a better man than I do. But I'm leaving it to you. I'm giving you the responsibility to solve this problem any way you want. And that's the relationship that Reed and I had.

23:53That's the relationship we have with everyone in the company, which is if you just say, hey, I'm going on vacation, it's on you. That doesn't work. Yep. But before I go, I know what I have to get done. I pick the time of the year when I can do it. I make sure I've got people who can back me up. And then that's fine. That's the difference. It's deep, deep trust, but it's trust based on expectations of responsibility coupled with the freedom to do the job, whoever you think is the most effective way to do it. Are you loving this conversation as much as I am? Amazing. Let's take a quick break with a word from our sponsor.

24:37If you're struggling to make progress on your dreams, this free tool is going to help. It's called the yearly goals map. And in just 10 minutes, you're going to get clear on your top priorities and let go of what's keeping you stuck. It's super quick. It's powerful. And you can do it any time. Get it now at marieforleo.com slash yearly-goals or just scan the QR code on your screen right now. One of the things that I love that you shared was the process of how y 'all named Netflix. I know you guys, you had the office. You had an idea, but you didn't have a name. And walking through the whiteboard with all the different possibilities, and I love that you shared this pro tip that one or two syllable names often do best, especially when the emphasis is on the first syllable.

25:27And I think the beta name you chose was Kibble, and you shared, and I didn't know this, Amazon was originally Kadabra. Twitter started off as status. I've seen so many entrepreneurs, Mark, especially, again, real newbies, like, what? is the name. It's got to be perfect. If I don't have the perfect name, I can't start the business. And I call those things creative cul-de-sacs. It's like you're in a little car and you're driving around, you're driving around, and I'm like, stop, get out, pick something. So what do you say to folks, whether it's a name of the company or anything else that they're trying to get perfect?

26:02What would you say to them when they get stuck there? Well, it's funny. You and our kindred spirits, I'm going to borrow the creative cul-de-sac. I just call it circular problems where you go, okay, this looks good, but it's got this problem. All right, let's try this because that solves this problem, but it creates a new one. And you do that three times and all of a sudden you're back where you started. Yes. And the key is to recognize when you're in the creative cul-de-sac. You get into them, of course, but it's to recognize when you're there. And in many ways it frees you up because now you have permission to choose a suboptimal solution.

26:35You don't need it to be perfect. And I, boy, do I have respect for people who are trying to name a company these days. It was hard enough back in 1997. You know, now I think I saw it described picking a company name is like a drunk cat playing Scrabble. It's like, you know, lots of X's and Z's and blank letters and weird punctuation. It's tough because you do. You need to have something which hopefully is evocative. Right. Makes sense. It's easy to spell. It doesn't mean something obscene and Lithuanian. You can get a domain name for it. You can get a trademark. You can get the Twitter handle for it.