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One Thousand and One Ideas Later: The Secrets of Netflix's Founding.
One Thousand and One Ideas Later: The Secrets of Netflix's Beginnings by Mark Randolph, founder of Netflix, which I started reading because of another book about Netflix's culture.Rule ZeroThen a friend recommended it.Rule ZeroFocusing on Netflix's elite culture, One Thousand and One Ideas After is more of a memoir of Mark Randolph's own entrepreneurial endeavors, and since the Netflix story is already quite familiar, it's actually very easy to read.
If imagining the success of Netflix and wanting some guidance on company management, One Thousand and One Ideas Later: The Secrets of Netflix's Beginnings is not the book you're looking for.Rule ZeroThat's what it's all about. But if you're genuinely interested in learning about Netflix's startup history, One Thousand and One Ideas Later: The Secrets of Netflix's Beginnings is a less embellished tale told by a founder who has since left Netflix, and has less of the baggage that comes with the image that Netflix has become a large corporation.
The beginning of a company: Dots
Before you start a business, you need to have an idea. Successful companies come from (relatively) successful ideas. Everyone has blind spots, and there are some ideas that people know won't work when they hear them, but not everyone has the means to tell you about them, or the means to listen to them properly. The hardest part is the brainstorming to figure out where to start. The brainstorming between Mark and current Netflix owner and co-founder Reed was the best part of the story for me. Mark and Reed are in a car together, and Mark keeps throwing ideas around, and Reed is usually the one who gets them back.
The idea for Netflix didn't come out of a sudden divine revelation, we didn't just suddenly come up with the perfect, practical, this-is-it idea in the blink of an eye. I didn't know what was going to work and what wasn't going to work... In 1997, all I knew was that I wanted to start a company and I wanted to sell stuff on the Internet. That was it.
There were a lot of ideas in the beginning, starting with custom baseball bats. Mark kept trying to figure out what to sell, and Reed kept telling him why it was going to fail, straight up. But why did Mark end up founding Netflix? Because he didn't get discouraged and kept coming up with new ideas.
Reed's role in the beginning of the story is more like giving direction, and as we see later we realize that most of the "hard work" in the grassroots period was Mark's job. Reed gives direction and money, but what's really important is the importance of having people who are willing to give their opinion, and the importance of those who are criticized being willing to fix it. Reed said that baseball bats wouldn't work, and that to sell something, it had to be produced once and could be used over and over again, until finally Mark came up with the idea of mailing a video tape that could be used over and over again as a product. But there was a cost problem with mailing videotapes, so they finally found DVDs, which at the time was still a technology that didn't know if it would ever take off, as a mailed product.
Because it was not yet mainstream, there was no competition, and there was a potentially viable business model, the company took a chance. Reed, who had already started a successful business, put up most of the money, and Mark, who was willing to take the risk, put up the effort, and a company was born.
It takes the right people, the right resources, and a willingness to take risks to start a business.
Company Culture
We all know how hard it is to start a business, and Mark has written about a few things in detail. At the beginning, we had to hold meetings in the restaurant, then we had to set up our own office network, move the chairs in the office, withstand our family's misgivings, balance between work and family, worry about what title to give to the person we found, and find money.
The culture of startups is also built collectively from the people they find. InRule ZeroThere is a lot of talk about the various principles that in Mark's eyes are early and naturally occurring.
For all of us, Netflix is an opportunity to work in the environment we've always dreamed of. It's a chance to do things our way.
I know that myself and everyone on the founding team, given a bunch of tasks and a lot of space, we'll do just fine. Our culture is, quite frankly, nothing more than that.
Netflix eventually called this "freedom and responsibility," but that was years later. In the beginning, we just did what came naturally. We didn't have a set number of hours that you had to be at work, so you could come in at whatever time you wanted and leave at whatever time you wanted. It didn't matter how long you were in the office, it mattered what you accomplished.
ActuallyRule ZeroThere are hints of corporate culture in the book, especially the transparency of honesty and outspokenness, as we can see in the conversation between Mark and Reed earlier in the book.
Test Markets
No matter how good the idea is at the time of starting a business, it's the market's reaction that makes it real. Rapid testing is a principle mentioned in most Silicon Valley startup books, but it's so important that each book has its own story to tell. There are a lot of problems that startups need to find out what strategies are better, and rapid testing is the culture of Silicon Valley. Only what you learn from hard testing on the ground is real.
Netflix was no exception, and the founding team had a tough time testing out all the issues that arose soon after the launch. For example, in order to test whether next-day delivery would reduce unsubscribes, the team spent four hours a day driving to Sacramento for same-day delivery and back, and found that unsubscribes didn't go down, but new subscribers went up.
Canadian Principles: Success Requires Focus
There's something in theRule ZeroThe Canadian Principles have not been mentioned, so I think it is particularly important to bring them up. Mark calls the Canadian principle "focus". In the early days, Netflix had considered entering the Canadian market many times. The US and Canada share the same language and culture, so it felt natural for DVDs to enter the Canadian market. But in fact, there are a lot of issues to consider when shipping to Canada, such as cross-country shipping, the needs of French-speaking Canadians... It's not that easy. So in the early days, they decided to focus on the existing market, not to create too much direction, but to give up everything else. The same applies to personnel. Netflix is known for sending away talent it no longer needs, and it's all based on the Canadian principle of business: focus.
No matter how good the idea is at the beginning, as the market changes a company will go through many pivots, whether it's due to market reaction or expectations for the future, a company will go through many changes in direction. In the case of Netflix, the most significant pivot was the decision to focus on rentals and give up selling DVDs, which brought in a lot of revenue. The author didn't write as much about this as I would have liked, mostly talking about the process of dealing with amazon (who they thought would start selling DVDs and would be better than Netflix) before making this decision. But the fact that they gave up most of their revenues in time is very rare, think about how the founders of Netflix decided to give up sales when only 1,000 out of 100,000 in revenues was from rentals.
But the Canadian Principle isn't just a success story, it also has its cruel side, and eventually Mark left after realizing he was no longer the man Netflix needed because of the Canadian Principle.
How passionate are you about your business? What do you want?
The last third of the book is devoted to Mark's own gradual exit from Netflix as it begins to take off and Reed takes over. It's a sad read, but it also reminds us that we need to be clear about what we're looking for. Mark himself said how he felt when he decided to give up his position as CEO after talking to Reed:
I started out with a dream: a new company with me at the helm. I realized that there were two dreams, and I had to sacrifice one to make the other one come true: Netflix was one dream, and I was at the helm of the other. If I want Netflix to succeed, I have to be honest with myself about my limitations.
Maybe you won't be the one in the limelight or the one making the most money when you finally succeed. Are we prepared for that before we start this business?
Prepare for Success
The story ends when Netflix goes public and Mark leaves. But I did like the Randolph lesson at the end, which seemed to illustrate Mark's principles of success:
1. If someone asks you to do something, try at least 10% harder.
2. Never, never, never tell anyone what you don't know as a matter of fact. Be careful and keep the commandments.
3. be courteous and always considerate - up and down.
4. Don't criticize, don't complain - only make constructive and important comments.
5. Don't be afraid to make decisions when you have facts to base them on.
6. Quantify when possible.
7. keep an open mind, but do not be gullible.
8. Rapid action.
There is also the spirit of entrepreneurship, which is not mentioned above, but is embodied in the title of the English book (That will never work).
When Mark's wife first heard about the original idea for Netflix, she said, "That will never work. (That will never work." Mark replied, "Nobody knows anything. Mark replied, "Nobody knows anything. (Nobody knows anything."
By being open to feedback, and by persistently honing your ideas and polishing your methods, you will eventually find a path that works.
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