Marc Randolph - Co-founder of Netflix

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All right, what is going on, everyone? Casey Adams here. Welcome back to the Rise of the Young podcast. Today we are joined by none other than Marc Randolph, the co founder and founding CEO of Netflix. Thanks so much for coming on, Mark.

It's a pleasure to be with you, Casey. Thanks for having me.

So let's talk about this. Man, number one, congratulations on all of your success as an entrepreneur. I'm excited to dive into it today. But during the early days of Netflix, when you were on board, where did this idea for revolutionizing the media industry come from? And I'd love to just hear what, what the ambition was back then and what led up to that moment.

Well, first thing I have to dispel is there certainly wasn't this idea that we were going to disrupt or transform media. You know, at the time, this was purely saying, wouldn't it be interesting to start another company? You know, because Netflix was number, number six for me and I just wanted to try and solve an interesting problem. And I wasn't even particularly focused on it being in the entertainment category. It's not, not like, you know, I was a movie buff, you know, that I was really into French directors or art films. You know, I had young kids, my movie tastes. I ended up spending 90% of my time watching Disney stuff. So, you know, but at the time, though, I had. Well, as a bit of background, I probably spent the first 15 or so years of my career as a direct marketing person. Doing direct response stuff.

Yep.

Catalogs, mail order, magazine circulation, things like that. And so this was back in 1996, right about the dawn of the Internet, more importantly, kind of the beginning of this thing called E commerce. And as soon as I saw E commerce happening, I immediately recognized this is what I wanted to do. This was the next generation of direct response marketing. So if there was any dream of doing anything was, hey, could I build a really cool e commerce company? And the question was, what? And you know, my co founder, Reed Hastings And I would basically spend our carpool because we used to drive to work together brainstorming ideas. And just to give you an idea how far this was from the idea that we were somehow going to transform and disrupt entertainment. You know, one of the ideas I pitched Reed was personalized shampoo that you would cut off a lock of your hair, you'd mail it to us, we would formulate this custom blend and you'd subscribe to it. And he didn't like that. And then another idea I pitched him was custom dog food that we'd formulate this blend specially for your dog for its age and its breed and gender, climate, activity, whatever. And he didn't like that. And then eventually I pitched him one, which was doing video rental but mail, because basically it was a huge category. And at the time, everyone I spoke to was pretty convinced it was a pretty bad consumer experience, which just gave us the confidence there might be room for us to make all the mistakes you're going to make in doing a startup. And so it ended up being a video rental by mail. But even that idea took a bunch of things to fall into place. Like we had to wait about two months for this new format to come out into test market called the dvd. All those things combined, all these crazy ideas, all of my background, all of Reid's background, timing, I mean, that's what kind of led to let's do a DVD by mail rental company.

I love it. And I know that you go ahead.

And even then, you know, that was still a crazy idea that didn't work very well.

Totally. And I know that you said you had, what, six other companies prior to co founding Netflix? Where did your entrepreneurial journey begin and what led you into this career path of direct response, marketing, and just getting into the business world overall?

Well, I think very similar to most people your age. I hadn't the slightest clue what I wanted to do when I was growing up. It's not like I dreamed since I was five that I want to be a veterinarian.

For sure.

I had no idea. I did know I had these passions, and one, of course, was for the outdoors, for climbing and for mountain biking and kayaking. But I didn't quite see that leading to gainful employment. But I also knew that I loved starting stuff. I loved kind of filling holes that I saw or righting wrongs or, you know, answering questions. And for the most part, when I was in high school and in college, that all took the form of, you know, starting magazines or putting on plays or starting clubs. And those sort of things. But in some ways, looking back, that really was the roots of the whole entrepreneurial bug.

Yeah.

But even that didn't take route. You know, it happened that my first job out of college, I got a job, you know, now it has this fancy name. Now they call it chief of staff. Basically, I was a gopher for a CEO of a music publishing company.

Okay.

And what my job was was to follow him around during his day with a pad. And I'd be the person sitting quietly in the corner during meetings. And, you know, if he said, oh, Casey, I need those numbers by Wednesday, I'd write down, make sure Casey gets in the numbers by Wednesday.

Yep.

Or if, you know, someone else had commitments, back and forth. So my job was kind of just basically help keeping him organized. But it was awesome because I saw what a CEO did. I saw how he treated people, I saw how he dealt with things. But more importantly, I was introduced to all the different parts of this music publishing business. And one of them happened to be a mail order division, which is a dramatic overstatement of what it really was because it basically was just a little backwater where we had put little one word, one sentence descriptions in the back of all the sheet music magazines we published, which was, you know, for a list of more great Cherry Lane songbooks, send a self addressed stamped envelope. And this mailer division basically consisted of making a copy of this list of more great Cherry Lane songbooks and putting it in the self addressed stamped envelope, mailing it out, and if an order came in, go back to the warehouse, find it in the piles of dusty books and ship it out.

Yeah.

And for some bizarre reason, I thought this was fascinating and I said, I want this job. And I did that. Ended up being given the job as in charge of the direct marketing. And little by little, out of curiosity and passion, just began building it up and experimenting and teaching myself direct marketing and realized that I was passionate about this, that it was this right blend of creativity and analytics and art and science that really kind of. And building something from nothing. Yeah, that kind of spoke to me.

I love that. And when you talk about, like building a company, I'd love to talk about just in the early days of Netflix, the importance of culture and building that team and having that vision. Like, can we talk about just what that was like back then when you guys had the idea and all the way up to just the execution of making the product and putting it out there in the world?

Well, you're basically asking me to condense 23 some odd years into a few sentences. And of course it's impossible. And because, you know, companies don't get built in a day and they certainly don't get conceived. It isn't like you all of a sudden go, here it is, it's gonna have 200 million subscribers. We're gonna produce our own movies, do our own television shows. People are gonna say Netflix and chill. And I mean, you never envision any of that stuff just trying to survive day to day. But you brought up the word, you know, you mentioned the culture part of it. And it's especially important to dispel the myth that somehow culture is something that you sit down and plan. And I know that is what people think happens. And they think that because everyone is always harping on correctly about how critical culture is. You know, that culture eats strategy for breakfast or all kinds of weird expressions like that. And so they think, okay, need a product check, need a go to market strategy check. Need a culture. Okay, let's all have a meeting and let's figure out our culture. And that's complete bullshit. No one, that's not how it works. Culture is not what you say and it's not what you write down, and it's not what you put in your PowerPoint or any of that stuff. Culture is purely what you do. Culture is who you are. Culture is how you make decisions, how you treat people, what you reward, what you punish, who you hire, who you keep, who you promote. That's culture. And Netflix was certainly no difference. The Netflix culture just sprang from who I was, from who Reed Hastings was, and from the way that the two of us interacted. And just to give one or a couple of quick examples, you know, Reid and I, one of the. When I first met him with his company, bought a company that I started, one of the things that immediately attracted me to him and I think came to me was that we were both totally honest, that kind of had this feeling that life is too short to sugarcoat things or to try and bullshit your way through stuff. Yeah, that you basically. So he's to say what you think, good or bad. And when you find someone else, you can have that where the other person is not going to react badly to a painful truth or appreciates a really good fact based argument. You have this connection. And so as a result of that, that permeated everything. You know, him and I would have no problem having these long drawn out battles in meetings about what the right thing to do is. But then of course, once you figure it, you immediately Forget who was on which side of the argument, you immediately forget whose idea it was, and you just fall in behind what is now obviously the right way to go. And if you don't believe it's the right way to go, you fall in mind the principle that you've got to make a decision and let's just do this, and I'm going to support it fully. And people see Reid and I interacting that way, and then they see other people in the meetings go, have permission to do this, and they see how we treat someone who doesn't tell the truth or isn't being fooled. And that just ends up becoming this deep seated, as they call it, a radical honesty culture that still permeates Netflix.

Absolutely.

Many more examples to that. But it's. That's where culture comes from. And it has to be true to you. You can't have one. You have a culture that goes, you know, we are. We're ruthless about hiring only the best. Your heart, you go, no, I firmly believe that my people I work with are family. It just won't work. And you have to fit the culture to who you really are.

Absolutely. So I know your new book, that will never work. When I heard the title, I was like, I love it. Where did this idea for writing a book come from? And what are you excited about with your book and what does it mean to you?

Yeah, that's an interesting question. There's a couple reasons that I wrote the book. Three, maybe if I want to go into the third one a little bit. The first one, basically, is that I kind of wanted to tell the untold story of Netflix. Everyone believes that the companies, as I mentioned, spring out of thin air, that ebay came from trying to sell his girlfriend's PEZ collection or. And boom, you know, or two guys rent out a spare bedroom with an air mattress. Boom, there's Airbnb, can't get a limo. Boom, there's Uber. Doesn't happen like that. And I wanted people to see what really went into starting and growing a company, that it really isn't just one perfect idea, that it's the work of hundreds of people all contributing little bits, and that there's huge disappointments and challeng. And more importantly, that the person who starts these companies is not some genius, know it all, who has this perfect vision, but in fact has very real flaws and is struggling to hold a company together. At the same time, they're holding the relationship together. At the same time, they're trying to make sure they're staying whole As a person, I wanted people to see those things and I wanted to write a very honest book about that. The other one is that one of the things I've learned in 40 years as an entrepreneur is that I have all these tips and tricks and secrets that I've learned over the years about how to start companies, how to take ideas and turn them into successful businesses. But the insight was that it doesn't just apply to businesses that in fact, these exact same things that I've used in entrepreneurship are the exact same things that anybody can use in if they have this dream or this idea they'd like to see made real. And I, I know that everybody has ideas. I mean, everyone who's taken a shower has had an idea, but everyone goes, now what, you know, people of your generation, probably the single biggest piece of advice that you're ever given is oh, follow your dreams. Or some version of it.

Absolutely.

It's in every single commencement speech, it's in every single piece of advice that well meaning adults hand out. But no one ever tells you how. As I look, there's very few follow your dreams 101 courses you can take. And in some ways, I wanted to be that will never work to be the handbook to how to follow your dreams, how, where do you do if you have this idea? And whether you want to change the world or just change your life or just change someone else's life or just get a better job or a better apartment or figure out something, it's the same exact process. And I wanted to lay that out. And that's really why I said I want to write the book, I want to share some of these things with people. I've extended it now that will never work. Podcast with exactly the same.

Yeah. What are you excited about with the podcast? Because, I mean, for me, just for context, I've had my show for three years and it's opened up so many relationships and it's allowed me to tell my story and meet great people. But for you, what are you excited about with the show and what does it mean to you?

Well, you know, I haven't worked at Netflix in a long time, probably 17 years, something like that. I've been out for a while and I did another startup after, after Netflix. So I have been busy. But all along, pretty much ever since I left Netflix, I've been mentoring other early stage entrepreneurs. And whether it's a deep relationship, you know, where I spend hundreds of hours with the founding team or more frequently just saying, getting on the phone with someone for an hour to help coach them over a difficult moment. It's been part of my life ever since, and it's one of the most fulfilling things I do is actually help other entrepreneurs take the same shot that I was given a chance to take. And so in some ways, the that Will Never Work podcast is nothing new, because I've been doing this, which is doing these phone calls with early stage entrepreneurs forever. What's different is about a year ago, I decided to start recording them and I kind of had this hunch that maybe someone else would want to listen. And at the time, I never envisioned it being a podcast. I just said, someone's going to call me up and go, I'm really struggling with X. And I'm going to go, well, listen, I just had a really interesting call about three weeks ago with this person about that exact subject. Just send you that and you can listen to. And what was amazing is when I shared these tapes with people that A, they go, that really helped. B, they go, that was actually kind of interesting. I was totally drawn in by their story and it was funny and it was emotional. And more importantly, they went, it was hugely valuable because it just made me feel less alone, you know, because being an entrepreneur, in some ways that it's hard is a lonely thing. No one really understands what you're struggling with except other entrepreneurs. And here was a chance for them to hear these people being vulnerable about what they were struggling with. And I said, I'd love for this to get to a broader audience. And then in my classical way, rather than thinking it through, I do the classic entrepreneurial thing, which is, well, screw it, let's just start. And the next four people who emailed me said, can you spend some time with me? I said, yes, but here's the deal. I'm going to tape your call and I'm going to see if I can make it into a podcast. And I did four episodes and then I was terrible because it was just learning, but I learned a lot. And then I did four more with all my learnings and learned it even more. Then did four more and learned even more, and then finally said, okay, it's time for me to make all my mistakes in public, and began releasing the podcast back in February. I love that. It's awesome. I thought I was worried I'd run out of things to talk about, that it would all be the same problems, but it's remarkable the range of people and ideas and backgrounds and problems that people are having.

Absolutely.

Most recent one that came out last week was a young woman who I've known for a while who pitched this ridiculous, stupid little gadget that's kind of a combination phone holder and credit card sleep. I mean, it's when she first pitched me that, when she was back at High Point University, she said, I said to myself, this is ridiculous. This is never going to work. But of course I was helpful. And so she came on the show and now she just got a big deal with one of the world's biggest retailers.

Wow.

She got a patent. But now the thing is, besides just sharing in the success she's struggling with, where do you go from here? And other people are different. One other person just built a 60,000 square foot indoor adventure park in with rappelling and zip lines and beer and combining all these crazy things in Texas. And his struggle is not marketing or product. His struggle is he has three young kids and how does he hold his life together with a business who's now open 18 hours a day, seven days a week? So it's been really, really, really cool. And of course I had to call it, that will never work, because that is the quintessential phrase that every entrepreneur.

I love that after having all these different conversations with entrepreneurs, like, what would you say has been one of the biggest problems or just overarching issues that you would think entrepreneurs run into that you could help them avoid early on?

Oh, the single biggest issue is people don't start, you know, and it's not that they're lazy and it's not that they're not motivated. It's that they're struggling with this fundamental human fear of making an ass of yourself, which is doing something you're not sure of. You know, I don't know whether you ever tried learning a, you know, a second language, but it requires sounding like you're in second grade in public, in front of other adults. And starting a business is like that. You say, I have this idea, I have no idea if it's going to work. And the well meaning little mind that wants to protect you from ridicule goes, let's think this through. Maybe we can get more comfort that it's going to work, more assurance that it's going to work and you can't. It's the nature of a startup. You have no clue. You just got to do it. So the number one thing is people are scared to start, or if they're getting a little bit of success, they're scared to try something different. So the thing that separates the real successful entrepreneurs from the poser they don't just talk about it, they do it. In fact, they do a lot more than they think. And that's key. So a lot of it is giving people this push. The other one is focus, is you have this vision of what it requires and you have 70 things you have to get right. So the temptation is, I'm going to try and solve all 70 of them. And so you do this layer 1 70th thick across every item and that's you're doomed. And this trick is figuring out what are the two or three things that if you get them right, nothing else matters and then ignore the rest. And those two or three things are not the ones that are screaming the loudest or the biggest fires. They're subtle sometimes.

Absolutely.

People do that combination of figuring out what's important, the triage as I call it, and then the focus to say how do I stay focused on them even though other things are terrible and broken and falling apart.

Yeah, I love that question. So I know back when you were the co founder of and are the co founder of Netflix, you had this idea of E commerce and the future of E commerce back then. What are some industries or products or just businesses that you're looking at today where you think they have a lot of upside potential in the next 10, 20 years that people listening to just, you know, stay in touch with and put some focus into?

Well, the answer is I haven't a clue. And neither do you and neither does anybody else. Anyone who comes in and tells you something that's not obvious already. Yeah, you know, what do you know? So much more important is to put yourself in this position that you're, that you're prepared to react to regardless of what happens because quite frankly, nobody knows anything and anything could happen. I do quite a bit of angel investing, but I've long since realized that betting on the category is ridiculous. You have to bet entirely on the person that you've got to try and pick something that at least has potential. That's a big enough category. You're solving a big enough problem that you have the freedom to make mistakes without it killing you. But after that, it's entirely about the person. So I'm much, much more interested when I'm trying to figure out who am I going to mentor, who am I going to help, who am I going to invest in? Is, does this person have the creativity, do they have the persistence, do they have that combination of tremendous self confidence paired with the humbleness that they don't know everything and they need to Listen to other people's opinion too. And more importantly, do I like the people? Do I want to be along for the, for the ride? And then when I find these people, they drag me into these really interesting technologies. One of the founders I've been working with now for three or four years is a AI guy. His company is using AI for some really interesting things. And so now I really feel reasonably fluent on what that category looks like. Another company that I have been working with ever since they were literally in a garage is a robotics company.

Very cool.

And so it's not like I said robotics and went looking for a robotics company. It was much more, I said I'm just going to follow my curiosity, find interesting people and let's see what they're working on.

Yeah, I love that. How often are you looking at deals and as an angel investor, what do you look for when people come to you with different ideas? Obviously you talked about betting on the founders and the actual entrepreneur, but nowadays like where do you spend your time with deal flow and the influx of deals and just your overall day to day life?

Yeah, my overall day to day life is pretty cushy. I'm incredibly lucky in that I have had some of my, I mean I never did this for the money. I've always done it because I'm just passionate about it. And I'm, you know, I said that, you know, now I started seven companies or been part of string seven companies. And if you would ask me at the beginning, which would be the ones that were billion dollar companies which would be total flop, Never in a million years could have told you. And I worked just as hard and had just as much fun on all of them. But I was lucky that two of them were really good. It's a long way of saying I'm in this wonderful situation where I don't need to worry about my kids education, I don't need to worry about being able to afford healthcare. But other than that, the thing that I'm trying to worry about is having this balanced life. And so I probably only spend a third to a quarter of my week on the entrepreneurial stuff now, which is a lot for me.

Absolutely.

But it's the part that I love and I'm passionate about it and I absolutely still invest. And my criteria these days is not about making money, which is kind of a weird criteria for an investor. But the reality is I've learned I love early stage stuff. I mean I love series seed and series A when companies haven't yet figured it out, when the founders are charged with navigating this tremendous uncertainty. That's the type of company I'm drawn to and that I love. And at that stage, I have concluded it is impossible, impossible to have any degree of confidence in knowing will that be successful or not. And so for me to choose, oh, this one's going to make money, that one's not is such a complete waste of time and worse, drags me into things I don't want to be in. So it goes back the other way. Is this an interesting problem? And are these interesting entrepreneurs that I like that I emotionally want to see them get a shot and then the investment is purely about me having a chance to get a seat at the table while watching them do this. And it's why I don't invest in. I'm not a limited partner in big funds because that's just purely economics to do is it's the people, it's the problem solving. I'm trying to fill the hole in my life that I had for 40 years where my days were spent sitting around the table with really smart people solving really interesting problems. And I don't want to do that 7 by 24 anymore. I definitely want to do it. And finding really great companies to be a part of is the best way for me to get that.

I love that. And I think too, just for context, I'm 20 years old, my co founder is 21. And we're early stage right now we're raising capital, we've built this tech product is a company called mediakits.com and we're in that early stage of we have some product market fit, we have a great team, but it's about the uncertainty of the future. And for me as a young entrepreneur and someone that's in this world, it's exciting. And I think that excitement is really what fuels us and our whole company as a. As a whole.

Yeah, it's the best feeling in the world. It's the reason that I believe people should become entrepreneurs if they're drawn to that. And that if you're doing it because you want to be rich or you're doing that because you want to be famous or yeah, it's. You won't. I mean, I can tell you the odds are extremely slim. It's the exact same thing that you are the lead in your high school musical and you go, I'm going to be rich and famous in Hollywood. No, you won't. I mean, one in a million.

Yeah.

But if your motivations are. I love solving interesting problems. I love the excitement of coming into work every day and not knowing what I'm going to find. I love the hunt of trying to say, how are we going to solve this? And then when you solve that one, an even bigger one rises up. If those are the things that motivate you, then being an entrepreneur is the best, best gig in the world.

I love that.

And you're happy no matter what happens with the company. Even the challenges of doing soft landings can be fascinating too.

Yep. Last question before we wrap up here, Mark. Just overall, if you were to give your younger self 18, 19, 20 years old advice about starting your company, I know you go in depth in this, in your book and your podcast, but what would that advice be and why?

So I'm going to. I'll take the opportunity to give two pieces of advice. The biggest one, and I hope this is going to sound consistent because we talked about it already, is start. Whatever you're holding you back is ridiculous. I need to graduate. No, you don't. I need to raise money. No, you don't. I need a co founder. No, I don't. I need to move to Silicon Valley. No you don't. Believe me, it's way easier now where you are while you're living either in a dorm or in your parents house or way easier to do it then. The longer you wait, the harder it gets. And more importantly, the things you think need to happen for you to get started are excuses. And the trick, the trick is you have to figure out this technique of how do I validate my idea without actually doing it? Because the key to getting started is having that validation. The key to raising money is not saying, I have this great idea. Yeah, yeah, yeah. Imagine if you will. Yeah, yeah, yeah. The key is, look what I've demonstrated on my own, but I'm doing it by hand. I'm going crazy. I need to build out some way to make this repeatable and scalable. Yeah, and you start. The way to learn to be an entrepreneur is to start and not even start the company, just start doing something. Start leading, Start convincing people to help you with something. Do it for free, do it non profit, sell something door to door, put up a website, all that stuff when we're interviewing engineers, I don't give a shit where you went to school, I don't give a crap where you worked before. What I ask is what are you building? And they get excited about the project, they're building on the side and those are the people you want because they're driven by that okay, So I love that.

Well, Mark. Oh, God.

That's the big advice. One more last thing. I'm sorry, I got to squeeze in. I'm going to have the opportunity to speak to absolutely about this, and it's critical. So number one is start. Do something. Stop making excuses. The other one is relax, relax. You know, you don't need to figure it all out now. You do not need to know what you're going to do. I didn't know what I wanted to do with my life until I was almost 30 and things worked out fine for me. Life's a meandering path and you have no clue how all the pieces fit together. So you don't need to work at Goldman Sachs. You do not need to go to law school. Just take it easy. Let life come at you and you'll find it.

I love that.

That's my advice.

I love that. Well, Mark, again, I just want to say thank you so much for coming on the podcast today. Where's the best place for everyone to listen to your podcast, to buy your book, and then just stay in touch with everything that you have going on?

All right, I'm going to rattle all these up. The best place for all things Randolph is my website, which is Mark Randolph. And that's Mark with a C and Randolph with a ph. The book and the podcast are both called that Will Never Work. And both of them are going to be found pretty much any place you find books and podcasts. And of course, you can always follow me on Instagram at guess what? That will never work. And you can check me out everywhere else, too. If you can't figure out how to find me on Twitter and clubhouse and LinkedIn, then you've got a different problem.

Monarch Legacy of Monsters, An Apple original series. The world is on fire. I decided to do something about it on November 17th.

This place, it's not ours. Believed me.

The most massive event of the year arrives. If you come with me, you'll know everything thing.

I promise. My God. Go.

Monarch Legacy of monsters streaming November 17th only on Apple TV. Plus.