That Will Never Work
Wisdom from Netflix’s origin story.
My favorite types of books to read are origin stories. As humans, we are curious beings and we crave connection to others. All the real-life heroes we look up to started from somewhere. Plus we love photos like the one below of Google founders Larry Page and Sergey Brin where it all began in a garage.
Most of us have sat at an office desk at one point or another. And we know what it’s like to feel there’s something greater inside us. We know what it’s like to imagine bigger and better things.
In Marc Randoph’s That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea, we hear from the other co-founder to Reed Hastings on the early history of the company that’s grown to be both a technological and cultural phenomenon. Between the pages, we hear about the sacrifices, fortunes and failures, and those Randolph met and lost along the way.
These are my top 5 takeaways.
1. Epiphanies are rare.
Randolph debunks the myth there’s always a “eureka” or “aha” moment associated with it. There are many modifications to an initial idea on its way to execution that we underestimate how many times it’s gone through rinse and repeat cycles. Each tweak builds into the secret sauce to making it a success.
“[Epiphanies] they’re often oversimplified or just plain false. We like these tales because they align with a romantic idea about inspiration and genius.”
The book starts with Marc and Reed’s daily commute on Highway 17 into Silicon Valley where they’d bounce ideas off each other. Ideas can come from the ordinary of places. They thought about customized sporting goods like baseball bats or surfboards, and personalized dog food and shampoo.
2. You want something that’s scalable.
Personalization results in one-of-a-kind orders and purchases you bought only occasionally. It’s easier to scale a business that targets something you use or do relatively often, over and over again.
“You want something where the effort it takes to sell a dozen is identical to the effort it takes to sell just one. And while you’re at it, try and find something that’s more than just a onetime sale, so that once you’ve found a customer, you’ll be able to sell to them over and over again.”
Randolph proposes selling videotape rentals in an online store. The year was 1997 when Blockbuster was still king and Amazon had just gone public. DVDs were just starting to be mainstream, and much smaller and lighter than VHS tapes. So much so, the discs could fit into a standard business envelope requiring nothing more than a first-class stamp. The idea catches fire.
3. Nobody knows anything.
According to famous screenwriter William Goldman, those 3 words are key about the Hollywood business. That nobody really knows how well a movie is going to perform… until after it’s been released. And those 3 words are true about Silicon Valley too.
“You’ll learn more in one hour of doing something than in a lifetime of thinking about it.”
If nobody knows anything, then you have to trust yourself, test yourself and permission yourself to fail. The idea for an online DVD rental priced on a subscription model and delivered by mail could work, but nobody knew how — until it did.
4. Empathy goes both ways.
Netflix has a process of streamlining the business to keep lean called “scraping barnacles off the hull”. Using boats as a metaphor for companies, sometimes you have to remove the barnacles that accreted along the hull because it slows down progress.
In late 2001 and months before going public, the company had to make deep cuts in order to become profitable on the money they already have. A founder’s dream also belongs to those who help them. It’s never easy to have to let go those who worked for you selflessly for years.
“When I looked up, I saw someone I had hired myself, many years ago: a hard worker, a skilled coder, a nice guy. He just hadn’t made the cut.
“Sorry, Marc,” he started. “I don’t want to interrupt you, but I wanted to come back and make sure you were okay. This must have been really tough on you.”
5. Loosely coupled but tightly aligned.
Randolph uses a backpacking trip as a startup metaphor. Everyone on the journey are like-minded and share a common goal. If the next campsite is over a mountain and there are no previous trails through. What route do you take?
“The best way to ensure that everyone arrives at the campsite is to tell them where to go, not how to get there. Give them clear coordinates and let them figure it out.
The answer is none of them. Because if there’s no trail, why force everyone to go the same way? Innovation results from setting targets with narrowly defined tasks.
Plus it’s not the shiny perks of modern day tech offices that really drive employee satisfaction. It’s giving them freedom and responsibility.
