Reed Hastings on the importance of focus

03 and 04 were growing really fast. 05 blockbuster attacks. And so we thought we were very clever. We came up with a number of ways to counter attack. And remember that everybody's got every dvd, so you've got basically the same Blockbuster. And us had the same content offering because it's non exclusive licensing to get DVDs so we could differentiate on our service. Fulfillment levels were 99% and theirs were 80, 89. But that's like a really abstract for a customer, you know, thinking of signing up doesn't mean anything, right? And then they discounted massively. So it was like half our price. And so we were losing share. So, you know, we were struggling with what to do about it. So we did three or four big efforts. One is in the end of 05, we added Netflix Friends, which was our own social network. Remember in 05, you know, Facebook's just on a few universities, okay. So our own social network amongst our members. And if you enabled each other, you could see what each other were renting and rating. And we thought, wow, the viral effects of this would be really powerful, et cetera. We added ad sales back in the day. It was like Yahoo type banners. And you could have. We could have. We sold banners, you know, above the choosing interface. We added used DVD sales on our site to consumers. So you know, of course we had some excess DVDs from four years ago. So we added an operation to sell them for four bucks a pop. And you know, it's a different logistics, but we added all that and we added Red Envelope Entertainment, which was a group that we brought in to buy DVDs, buy films out of Sundance and similar festivals, to then publish them on DVD. So getting into content. So we did these four efforts and each one was a dozen people, 15 people, and made us feel great. The employees loved them because here was a tangible thing that was not just 98% versus 89%. Here was the thing that they couldn't do or weren't doing. It was a differentiator and wasn't management so clever? And we went through these waves of battles in 06 and 07 and in the end we won. They ended up closing down their online thing and two years later going completely bankrupt. But we looked back and none of those four efforts made any contribution to our victory. And one by one, we had closed them down along the way. Every single one of those four. And so in hindsight, we realized when attacked we should retreat to do the core better and not try to broaden the surface of attack. Essentially. And it was a great lesson for us of focus. And so now when people say, aren't you getting into news or sports? We're like, absolutely not. You know, and we're really confident of our answer. Like movies and TV shows on a global basis, enormous market. And so we're much less subject to being prone to go off and chase the shiny object, to try to have something in a checklist to differentiate and to trust. And in hindsight, if we had just gone from like 98% perfect to 99.9, we would have done a lot more for the business. And, you know, and it's hard work. It's operational logistics, how to get DVDs not to break. I mean, the amount of polycarbonate analysis we had to do is all this stuff. We would have beaten Blockbuster sooner than we did. And so that's one of the great less.