Saturday, September 21, 2013

Reed Hasting's Success Secrets

Today Reed Hastings is best known for disrupting both the TV industry and video stores through his company, Netflix. But that was never his intention.

Hasting was happily recovering from growing, running and then selling his previous startup, Pure Software, when he hit on the first germ of the idea that resulted in Netflix.

Here's the story, as uncovered by Dutch entrepreneur Boris Veldhuijzen van Zanten, co-founder of The Next Web, in a recent interview with Hastings in Amsterdam.

Q: Usually when you ask people how they came up with an idea they have an official story about market opportunities but when you press on it is usually a more personal story and a personal frustration that inspired the original idea.

"I got this big late fee [from a videostore], for $40, and I didn’t want to tell my wife about it. I was just too embarrassed. It was like that was the defining moment for Netflix and a lightbulb went off in my head. But that frustration was the instigation for my work on Netflix. A few months later I looked into video rentals and then a friend told me about DVDs and I figured those would be light enough to mail, and based on that we got started with Netflix."

For a little more context, here's the Wikipedia version of this event:

In 1998 Hastings and Marc Randolph co-founded Netflix, offering flat rate film rental-by-mail to customers in the United States.[12] Headquartered in Los GatosCalifornia, Netflix has amassed a collection of 100,000 titles and over 20 million subscribers.[13] "I got the idea for Netflix after my company was acquired," said Hastings.[1] "I had a big late fee for 'Apollo 13.' It was six weeks late and I owed the video store $40. I had misplaced the cassette. It was all my fault. I didn’t want to tell my wife about it. And I said to myself, 'I’m going to compromise the integrity of my marriage over a late fee?' Later, on my way to the gym, I realized they had a much better business model. You could pay $30 or $40 a month and work out as little or as much as you wanted."[1]

But the TNW interview offers another significant moment, as Hastings talked about just how dissatisfied he is with his own product. His comments are instructive, because it indicates just how firmly entrepreneurs should be focused on the future, not on the current state of things.

"I see all the imperfections in Netflix. I see all the things that aren’t working. At the office I’m the one that says “we suck”. Don’t get me wrong; we are better than everyone else, but we suck compared to what we are going to be. Of course, in general I’m constraining myself from saying these things because they are too easy to take out of context. But as an entrepreneur that’s how you have to look at your product. Compared yourself to what you want to be, what you will be, in five years, and that should be so much better than what you have today."

You can read Boris's original article here:

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