An excerpt from ‘No Rules Rules’ by Netflix CEO Reed Hastings and Erin Meyer

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Reed Hastings. Photo: Ethan Miller/Getty Images

In the 1990s, I liked to rent VHS videos from the Blockbuster down the street from our house. I’d take two or three at a time and return them quickly to avoid late fees. Then one day I moved a pile of papers on the dining room table and saw a cassette that I’d watched weeks ago and forgotten to return. When I took the movie back to the store, the woman told me the fee: $40! I felt so stupid.

Later, that got me thinking. Blockbuster made most of its margin on late fees. If your business model depends on inducing feelings of stupidity in your customer base, you can hardly expect to build much loyalty. Was there another model to provide the pleasure of watching movies in your own living room without inflicting the pain of paying a lot when you forgot to return them? …

About

Reed Hastings

Reed Hastings is an entrepreneur who has revolutionized entertainment since co-founding Netflix in 1997, serving as its chairman and CEO since 1999.

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