Today Reed Hastings is best known for disrupting both the TV
industry and video stores through his company, Netflix. But that was never his
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
In 1998 Hastings and Marc Randolph co-founded Netflix,
film rental-by-mail to customers in the United
in Los Gatos
Netflix has amassed a collection of 100,000 titles and over 20 million
got the idea for Netflix after my company was acquired," said Hastings.
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."
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
You can read Boris's original article here: