What Every Business Owner Can Learn From Netflix
Discussions about the latest binge-worthy shows on Netflix are now as common at parties as sports talk or observations about the weather. Netflix is so ubiquitous, in fact, that it’s hard to believe only a few years ago most people had never heard of the streaming service.
Started in 1997 by Reed Hastings as a DVD-rental service, Netflix floundered until 2012 when it introduced original programming, including critical and audience favorite House of Cards. Since then, Netflix has expanded at breakneck speed and now has more than 50 million subscribers in 130 countries, and is valued at over $60 billion.
No matter what field you’re in, there are valuable lessons to be learned from Netflix’s meteoric rise to success.
#1: Address a Need
Remember video rental company Blockbuster? By the late 1990s, the company (now in near total demise) had thoroughly angered its customer base with high fees. After racking up a $40 late fee of his own, Reed Hastings saw a problem that needed a solution. So he devised a plan to give customers access to rentals for as long as they wanted.
#2: Look to the Future
While experimenting with movie-rental ideas, Hastings realized DVDs — a new technology — would soon dominate the industry. Although the technology was new, he focused his energies on it knowing it would soon eclipse VHS. He experimented sending himself CDs in the mail to see if they would survive the post office. When he realized discs could be shipped quickly and safely, his business was born.
#3: Never Give Up
Blockbuster had the chance to buy Netflix in 2000 when Hastings was struggling to grow the company and offered to sell it for $50 million. Blockbuster rejected his offer and refused to discuss an alternative amount. Hastings didn’t let rejection stop him and his company is now worth more than 100 times that original sales price.
#4: Keep Innovating
Blockbuster downplayed the importance of video streaming and waited far too long to enter the online game. Remaining stagnant lead to the company’s bankruptcy. Netflix, on the other hand, embraced the Internet and experimented with new ideas and different ways to deliver entertainment to users. One company was on the defensive, the other on the offensive. As always, innovation won.
#5 Focus on Growth
From the beginning, Hastings considered how his company could scale effectively. This future-focused approach helped him create a business model that could easily expand over time. Today, Netflix serves 130 countries and shows no signs of slowing down.