Marc Randolph is a veteran Silicon Valley entrepreneur, advisor, and investor. As co-founder and founding CEO of Netflix, he laid much of the groundwork for a service that’s grown to 150 million subscribers, and fundamentally altered how the world experiences media.
He is the author of the new book, That Will Never Work!
He also served on the Netflix board of directors until retiring from the company in 2003. Marc’s career as an entrepreneur spans four decades. He’s founded or co-founded six other successful startups, mentored hundreds of early stage entrepreneurs, and as an investor has helped seed dozens of successful tech ventures (and just as many unsuccessful ones).
Most recently, he co-founded analytics software company Looker Data Sciences, where he now serves as director. Outside of the tech and startup world, Marc sits on the boards of Chubbies Shorts, Augment Technologies, the environmental advocacy group 1% For The Planet, and the National Outdoor Leadership School (NOLS), which he’s been involved with for most of his life. A resident of Santa Cruz, California, Marc travels and speaks all over the world, and still probably manages to go surfing more than you do.
00:00:26.610 --> 00:00:34.680 Graham Dobbin: Welcome is talk radio dot nyc live in New York, and this is the mind behind the leadership, my name is a grim dobbin and.
00:00:35.580 --> 00:00:45.930 Graham Dobbin: Not one of the things I keep reflecting what happens on this show and i'm really lucky I get to speak with some really talented people and tonight we're raising the bar significantly.
00:00:46.890 --> 00:00:57.660 Graham Dobbin: And the last year has definitely changed perspectives and approaches and business practices and ways to do business that we probably previously dismissed or say written work.
00:00:58.050 --> 00:01:08.490 Graham Dobbin: And know embraced and that's mainly through need to change some things we don't say the influences to help disrupt us what we do and help us look at things through a different lens today's guest, though.
00:01:08.970 --> 00:01:16.680 Graham Dobbin: Has a gift doing that instinctively well look i'm assuming it's a gift because of his background, maybe sticking a lot of hard work will find, though.
00:01:17.220 --> 00:01:24.750 Graham Dobbin: i'm absolutely delighted to see that tonight's guest is the Silicon Valley entrepreneur advisor and investor and.
00:01:25.320 --> 00:01:37.440 Graham Dobbin: Oh yeah holes forgot the Co founder and CEO of netflix mark randolph now mark is a Louise best known as a co founder of the CEO of netflix.
00:01:38.040 --> 00:01:44.520 Graham Dobbin: And it's clear as an entrepreneur spends more than four decades I don't believe that because we can't be that far off the same age.
00:01:44.850 --> 00:01:58.860 Graham Dobbin: And that's it's definitely not for decades is founded or co founded half a dozen other successful startups including, most recently, look at data sciences, which was sold to Google for in 2019 wait for this 2.6 billion.
00:01:59.490 --> 00:02:09.720 Graham Dobbin: is currently mentoring, a handful of other early stage companies as advice hundreds of other entrepreneurs and is an active seed investor in startups all over the world.
00:02:10.170 --> 00:02:18.690 Graham Dobbin: is also the author of the international best selling memoir that will never work, the birth of netflix and the amazing life of an idea.
00:02:19.110 --> 00:02:24.420 Graham Dobbin: And if that's not enough I don't know where the packs all this in is also the host of a new podcast.
00:02:24.930 --> 00:02:34.170 Graham Dobbin: called that will never work really dispenses advice encouragement and probably more importantly My guess is tough love to struggling entrepreneurs.
00:02:34.740 --> 00:02:39.540 Graham Dobbin: When he finds a little bit of spare time he goes suffering goes mountain biking or back country skiing.
00:02:40.350 --> 00:02:47.250 Graham Dobbin: mark is a frequent speaker at industry events, he wants extensively with young entrepreneur programs will dig into that a little bit.
00:02:47.730 --> 00:03:00.090 Graham Dobbin: Later, and sits on the boards of environmental advocacy group for a 1% for the planet and the national outdoor leadership school i'm mark, I need to take a breath after all that.
00:03:01.530 --> 00:03:05.100 Graham Dobbin: good to see that was really quite a mouth, I was quite a mouthful i'm i'm.
00:03:05.100 --> 00:03:07.890 Graham Dobbin: impressed I didn't want to leave anything out.
00:03:10.800 --> 00:03:18.780 Graham Dobbin: Mark hyman did someone with a BA in geology end up here it's it this stuff.
00:03:20.670 --> 00:03:28.200 Marc Randolph: Yes, it is a little bit of an unusual background for an entrepreneur and have a BA in geology but you know and some ways, Graham.
00:03:29.190 --> 00:03:40.110 Marc Randolph: it's not out of character, because the reason I chose to major in geology was the same reason that i've done so many things in my life, because I was curious.
00:03:40.560 --> 00:03:52.770 Marc Randolph: I did it because I was interested I did it with zero thinking that Oh, this could be a good career move for me, I mean, believe me, the last thing I wanted to be with a petroleum geologist.
00:03:53.220 --> 00:04:00.570 Marc Randolph: But i've always been a outdoors guy i've been a climber i've been a mountaineer I do a lot of back country things.
00:04:00.960 --> 00:04:18.180 Marc Randolph: And it didn't take me long to figure out that the geology majors sure spent a lot of time on field trips and so, basically, I was signed me up for that, but as soon as I was done with school that was pretty much the last I focused on on geology.
00:04:18.930 --> 00:04:23.730 Graham Dobbin: So what did you focus on them what was what was the first first move into business.
00:04:24.870 --> 00:04:33.390 Marc Randolph: Well, you know I joke actually that I majored at school, not in geology but an extracurricular activities and before you jump to a conclusion.
00:04:33.390 --> 00:04:33.720 Careful.
00:04:34.950 --> 00:04:35.580 Be careful.
00:04:37.080 --> 00:04:38.880 Graham Dobbin: it's a family show yeah I don't.
00:04:39.660 --> 00:04:47.670 Marc Randolph: I don't mean drinking and partying but really what I spent most of my focus on in school i'm before was.
00:04:48.240 --> 00:05:03.000 Marc Randolph: Starting things trying to solve problems, you know basically seeing the world's an imperfect place and saying is, can I do this, so I started magazines I started clubs, I did things like that.
00:05:04.980 --> 00:05:25.200 Marc Randolph: Which sound like they're just trivial little exercises, but what those things really are are the early stages of the exact same skills that I would use many years later, when I was actually doing it for a profit and so much of my life as an entrepreneur.
00:05:26.370 --> 00:05:43.050 Marc Randolph: comes from i'm going to use the I guess it comes from a compulsion it's not like at some point in my life I said I want to do this, I want to be rich or I want to be famous because certainly back then, and yes, Graham I have been doing this for but more than four decades.
00:05:44.250 --> 00:05:57.480 Marc Randolph: There was no such thing you know as well, there were there were entrepreneurs, but it certainly wasn't glorified they weren't movies about it, they weren't TV shows they weren't college majors you just wanted to solve a problem.
00:05:59.010 --> 00:06:08.910 Marc Randolph: And that has been the thread that's going through everything but it, which is why we know whenever I meet someone who says i'd love to be an entrepreneur I say well just start.
00:06:09.390 --> 00:06:15.390 Marc Randolph: In no matter where you are in life, you don't need doesn't need to be a large for profit international enterprise.
00:06:15.810 --> 00:06:30.510 Marc Randolph: You know, make something still something try something do something, because the skill she'll pick up from doing something even a small scale, are the ones that you'll draw on later on, as you begin to get further and further along that path, oh.
00:06:31.260 --> 00:06:38.520 Graham Dobbin: i'm interested what's your what's your definition of an entrepreneur because we you're quite right it's almost like this, this new.
00:06:39.810 --> 00:06:44.760 Graham Dobbin: kind of phraseology and what that keeps on getting banded out with me, it seems to.
00:06:45.960 --> 00:06:54.660 Graham Dobbin: In the media, etc, seems to be given this this this this clock on it i'm just curious what your definition of what entrepreneurs.
00:06:56.340 --> 00:06:59.130 Marc Randolph: i've never really tried to articulate it in words but i'll give it a.
00:06:59.130 --> 00:07:07.830 Marc Randolph: shot, which is an entrepreneur is someone who tries to do something that hasn't been done before.
00:07:10.710 --> 00:07:22.110 Marc Randolph: And I hesitate to add the phrase in a business context because i'm not sure that someone who says i'm going to try and be the first person to climb mount Everest on roller skates.
00:07:23.160 --> 00:07:39.420 Marc Randolph: isn't necessarily an entrepreneur but there's elements to that because really what an entrepreneur is where other people well listen i'll give you a classic example, and this is from back when I was a kid you know, I was, I was six years old, I think, and I got my first job.
00:07:41.040 --> 00:07:46.050 Marc Randolph: And I was a door to door salesman selling seeds, you know for.
00:07:46.140 --> 00:07:52.620 Marc Randolph: Flowers and vegetables, and I am sure that this broke hundreds of.
00:07:52.650 --> 00:07:53.940 Child Labor laws.
00:07:55.740 --> 00:08:04.830 Marc Randolph: Because you know because basically the incentive here was if you sell 18,000 packs of seeds you earn a whistle or in my case, I was trying to earn a stopwatch.
00:08:05.610 --> 00:08:14.940 Marc Randolph: But what involved was door to door sales and you have to go to the door and you'd knock on the door and half the time you'd see the little I whole thing open and then shut again.
00:08:15.510 --> 00:08:22.500 Marc Randolph: Or if they opened the door and so as a kid That was the end of that or you'd get a few words out and they go oh isn't that Nice and send you on your way.
00:08:22.950 --> 00:08:34.950 Marc Randolph: And i'm sure that 80% of the kids 90% of the kids who did that gave it one day and then pretty much they were back on the couch watching bugs bunny cartoons all day.
00:08:35.550 --> 00:08:40.800 Marc Randolph: And, but for me it was like i'm going to figure this out.
00:08:41.400 --> 00:08:44.670 Marc Randolph: i'm going to figure out some way to get people to open the door.
00:08:44.940 --> 00:08:53.280 Marc Randolph: And when they open the door i'm going to figure out a way to get them to listen to me, and if they actually buy a pack of seeds i'm going to figure out a way next time to get them to order three packs or five packs.
00:08:54.120 --> 00:09:09.960 Marc Randolph: To me, was this challenge of trying to solve a problem and that never stops you see the world as an imperfect place and rather than being frustrated and complaining you go, I wonder if there's a better way to do that.
00:09:12.000 --> 00:09:16.380 Marc Randolph: And that's is what an entrepreneur does.
00:09:16.590 --> 00:09:26.100 Graham Dobbin: Do you have any um I love the definition and we're going to come to come and know that you said that you love to solve puzzles, so we will come to that a little bit later.
00:09:26.580 --> 00:09:38.880 Graham Dobbin: And is there anybody that you looked up to as an entrepreneurial role model, even if it wasn't maybe using those words as someone that you thought wow you know, I would like to emulate though or look have approached it.
00:09:40.740 --> 00:09:46.680 Marc Randolph: You know at that at the early age, I would say no, because.
00:09:47.790 --> 00:09:50.370 Marc Randolph: I didn't know anyone like that.
00:09:51.450 --> 00:09:52.950 Marc Randolph: If anything I.
00:09:54.000 --> 00:10:01.200 Marc Randolph: was more influenced by what I didn't want to do you know my father, for example, was he was an investment banker.
00:10:01.830 --> 00:10:10.680 Marc Randolph: He worked on Wall Street he advised very, very wealthy people about how to invest in manage their money, but he hated us.
00:10:11.460 --> 00:10:28.470 Marc Randolph: And I saw him, you know come home from work every day and just couldn't wait to be done with it and dreaded going back in the morning and when he used to say, listen mark if you really want to be successful you've got to do your own thing.
00:10:30.510 --> 00:10:40.890 Marc Randolph: And I think that rubbed off on me, maybe not as an incentive to do it, but certainly as a message that it was permissible.
00:10:41.460 --> 00:10:49.320 Marc Randolph: that this was not something that was scary and dangerous, but in fact was something to be aspired to and it wasn't perhaps until I really got my.
00:10:50.100 --> 00:11:02.160 Marc Randolph: My maybe second job at a college, where I had a job, basically, following a CEO of a company around all day watching what they did.
00:11:02.940 --> 00:11:18.300 Marc Randolph: Then I had the chance to actually observe what a business person did, and in this case, what an entrepreneur did how they made decisions, how they thought about these problems, and that was a pretty profound pretty pound experience.
00:11:18.750 --> 00:11:31.620 Graham Dobbin: So it was it a moment, then that you kind of walk up went right, this is it going to do my own thing, how did you go from from having a job and seeing this someone who influences to to doing your own thing.
00:11:33.480 --> 00:11:34.530 Marc Randolph: No.
00:11:36.570 --> 00:11:43.080 Marc Randolph: You know, I have three kids who are now you know they've they've finished college they're now in the workforce.
00:11:43.620 --> 00:11:54.810 Marc Randolph: And I watched all three of them still wrestle with this what am I going to do with my life, and I certainly see their friends and I meet young people all the time, who struggled with.
00:11:55.260 --> 00:12:04.710 Marc Randolph: Why don't I know what I want to do, why haven't I found my passion what what am and I, you know, I just wanted to go for god's sake chill you know relax.
00:12:06.360 --> 00:12:15.510 Marc Randolph: You don't need to know who you want to be when you're 14 years old, if you do I mean how lucky, is that you know i'm sure you probably met.
00:12:15.900 --> 00:12:24.030 Marc Randolph: Young people and they go when there are seven years old, I want to be a veterinarian when I grow up because I love cats yep and God Lo and behold.
00:12:24.600 --> 00:12:30.270 Marc Randolph: The pig veterinarians and you go how cool is that to learn when you're seven I didn't learn till I was 27.
00:12:31.080 --> 00:12:48.120 Marc Randolph: And, in some ways it wasn't even that I wanted to be an entrepreneur I kind of fell into that this this job that was basically following the CEO around you know nowadays as a glorified description they they call that being a chief of staff but.
00:12:49.320 --> 00:12:56.910 Marc Randolph: truth be told, I was a gopher you know basically i'd sit there i've been as all of his meetings with a with a pad and anytime.
00:12:57.390 --> 00:13:03.750 Marc Randolph: Someone promised the CEO or the those numbers by by Thursday i'd write down make sure it gets some numbers by Thursday.
00:13:04.110 --> 00:13:11.790 Marc Randolph: Or if my CEO committed is something i'd follow up with all these things I was just trying to keep him organized keep up keep his day.
00:13:12.330 --> 00:13:25.440 Marc Randolph: on track, but what it did it Allow me, as I mentioned before, to see what a CEO did all day but also introduced me to all the different divisions of this music publishing company that he was running.
00:13:26.340 --> 00:13:41.100 Marc Randolph: And one of the visions was a mail order division and just like Chief of Staff was the clarification so was mail order division because basically this part of the company.
00:13:41.670 --> 00:13:47.460 Marc Randolph: consisted of a single sentence that was printed in the back of all of the music books, they sold.
00:13:47.970 --> 00:14:02.550 Marc Randolph: And it's simply said for a list of more great cherry lane songbooks cherry lane was the company yeah send a self addressed stamped envelope to P O box Oh, and so, and for some crazy reason I said Oh, I want that job.
00:14:04.350 --> 00:14:14.550 Marc Randolph: Sure, the CEOs going, I have this is this is, this is a dream come true you've got it, and so my job was basically taking these.
00:14:16.680 --> 00:14:24.060 Marc Randolph: requests I go and make a Xerox copy of the list of more great cherry links long books and i'd slip it in the self addressed stamped envelope and mail it out.
00:14:24.660 --> 00:14:32.790 Marc Randolph: And when an order came in I go to the warehouse and i'd pick and Pack and ship the order and I love that and I began experimenting.
00:14:33.270 --> 00:14:42.570 Marc Randolph: And I began saying what happens if I do two pages of what if I throw in this, what if I do it in color What if I make it multi page how about a catalog What if I just mail.
00:14:42.930 --> 00:14:52.710 Marc Randolph: How do I keep track of the list, I need better software to attract these orders and essentially two things were happening, one is I was teaching myself direct response marketing.
00:14:54.240 --> 00:14:58.230 Marc Randolph: And the second thing that was happening was I was running my own business.
00:14:59.160 --> 00:15:15.120 Marc Randolph: I was recognizing the incredible excitement that came from coming to work every day and saying oh my gosh what am I going to try now, and especially with direct response, where you're constantly testing things and seeing how they did.
00:15:15.630 --> 00:15:22.950 Graham Dobbin: we're just about to go to a break what we're going to do when we come back is see how you test things know and also.
00:15:23.610 --> 00:15:37.080 Graham Dobbin: How you identify kind of what the puzzles are in business that you want to get involved and know because my guess is you're in the inverse position that you can choose what you what you enjoy doing and what you like to get involved with was talking about randolph.
00:15:38.730 --> 00:15:43.740 Graham Dobbin: live here on the mind behind leadership on talk radio dot nyc we'll be back right after these.
00:18:46.230 --> 00:18:54.150 Graham Dobbin: Welcome back you're listening to the mind behind leadership we're speaking with mark randolph the first CEO and co founder of netflix.
00:18:54.750 --> 00:19:00.870 Graham Dobbin: i'm mark just forward on the break that I was thinking about what kind of puzzles you, you might like to do in business.
00:19:01.290 --> 00:19:14.430 Graham Dobbin: But i'm also thinking about the name of the book and the podcast that will never work is that one of the things that triggers when people suggest that an ideal world work for so what what's behind that.
00:19:15.900 --> 00:19:24.210 Marc Randolph: Well, certainly what's behind it, is the fact that you hear it all the time, whenever you're doing something that has not been done before.
00:19:25.200 --> 00:19:33.180 Marc Randolph: And the reason I called the book that will never work in the podcast that will never work because, of course, that is what I heard 1000 times when I was pitching the idea.
00:19:33.930 --> 00:19:42.810 Marc Randolph: For what became netflix you know investors employees partners, you know even even my wife told me that would never work.
00:19:43.800 --> 00:20:02.760 Marc Randolph: But, in some ways you're right, it is this inspiration to say wow all right well i'm gonna have to prove that it will work but it's not really that it's more the realization that you're right yeah it won't work.
00:20:03.780 --> 00:20:15.510 Marc Randolph: Almost every idea that's pitched won't work and i'll go out on a limb there's no such thing as a good idea they're all bad ideas but that's the critical distinction here.
00:20:15.960 --> 00:20:24.450 Marc Randolph: Is that if you say it has to be a good idea, and you spend all your time trying to figure out the perfect idea you'll never do anything.
00:20:24.810 --> 00:20:38.070 Marc Randolph: What you have to do is take the idea, so I know it's flow I, but my job is to figure out why it's a bad idea i've got to quickly and easily and cheaply get my idea out in the real world.
00:20:38.550 --> 00:20:45.390 Marc Randolph: and find out why it doesn't work, because that is the path that leads you eventually to something that does work.
00:20:46.020 --> 00:20:59.070 Marc Randolph: So now, when I hear that'll never work I go I just roll my eyes and you know the all the people who told me that would never work for netflix well, they were right, you know, the idea that we originally started with it didn't.
00:21:01.020 --> 00:21:01.710 Marc Randolph: talk more about.
00:21:01.770 --> 00:21:01.980 That.
00:21:03.270 --> 00:21:13.350 Graham Dobbin: yeah interesting was actually going to come to that, because just having a look at it, how it evolves you seem to be a person that just allows things to evolve your starter.
00:21:13.770 --> 00:21:25.740 Graham Dobbin: Which is, which is obvious, but we spoke about change, and about how we how we manage what's going on in a different environment, you seem to work out really well to that and evolve with what what you see it's not fair.
00:21:26.970 --> 00:21:38.760 Marc Randolph: Absolutely in fact it's more than just adapt and evolve to it, that is, the fun thing about being an entrepreneur, the fact that things are constantly different they're constantly changing.
00:21:39.300 --> 00:21:49.110 Marc Randolph: You know I did have this brief stint at a large company, you know, a company which had 1000 plus employees yeah and as most large companies.
00:21:49.710 --> 00:21:57.540 Marc Randolph: would have they'd be a reorder a reorganization and data now it's there's going to be a real org and.
00:21:58.140 --> 00:22:12.780 Marc Randolph: 98% of the people will be going Oh, oh no what's what's gonna and I would secretly be thrilled yeah shake it up let's do things differently, give me a different job put me some different department.
00:22:13.980 --> 00:22:18.660 Marc Randolph: you're right it's actually I love I love the fact that.
00:22:19.440 --> 00:22:38.280 Marc Randolph: it's never the same you're always trying something new and it's one of the ironies that when something works when you finally have found the repeatable and scalable business model well now you're supposed to repeat it and scale it and what gosh that's not quite as much fun.
00:22:39.690 --> 00:22:41.820 Graham Dobbin: So that's it so.
00:22:43.080 --> 00:22:52.890 Graham Dobbin: You know, is the time because I smoke, I must be a really difficult decision when you get when you when you're involved with a company it's moving it's really shifting.
00:22:53.430 --> 00:23:02.340 Graham Dobbin: But the fun goes over especially somebody like you who's so creative and and starts, how do you make that as a big decision isn't there.
00:23:03.510 --> 00:23:06.990 Marc Randolph: yeah it's a very painful one.
00:23:08.040 --> 00:23:18.990 Marc Randolph: and listen, I can speak more personally about a very specific time I had to make that decision, because I listened yeah I no longer work at netflix you know I left quite a number of years ago.
00:23:19.770 --> 00:23:32.280 Marc Randolph: But I was i've been incredibly fortunate in that I figured something out early in my life, and I think it's one of the most important things you can ever figure out as a person.
00:23:32.790 --> 00:23:51.000 Marc Randolph: And it's number one what am I good at and number two, what do I, like doing and I was incredibly lucky that I figured both of those things out pretty early in my life and even luckier that both of them are the same thing, which is early stage companies.
00:23:51.600 --> 00:24:04.830 Marc Randolph: I love the challenges of launching an early company and trying to figure things out I love coming to work and sitting around the table with really smart people solving really interesting problems and.
00:24:05.490 --> 00:24:17.760 Marc Randolph: Okay modesty alert i'm i'm pretty good at that I have some natural gifts that make me suited for that environment, and so I was happy as a clam.
00:24:18.900 --> 00:24:40.140 Marc Randolph: At netflix and we became pretty successful we had an ipo we had the resources we began to hire is amazingly talented people and six seven years in it began to dawn on me that, yes, I still love netflix I mean it was my baby and I loved it the way you would love a child.
00:24:41.250 --> 00:24:51.420 Marc Randolph: But I also realized that the company was now at a size and the scale that I no longer really like the things I was doing every day and and perhaps more importantly.
00:24:52.050 --> 00:24:58.650 Marc Randolph: I wasn't that good at it, and so it comes back to well if you're truly going to be successful.
00:24:59.220 --> 00:25:07.650 Marc Randolph: Success is being able to do things you like it you're good at, and why can't I do that and there's no reason, which is why.
00:25:08.640 --> 00:25:20.340 Marc Randolph: I ended up working you know, over a period of a year or so gradually began to transition myself out of the company and now i'm back working with early stage, companies and that's that's my place.
00:25:21.150 --> 00:25:33.390 Graham Dobbin: i'm for also sounds like is and we'll go into will come to break in a few minutes we're going to a little bit more about the netflix after the break, but why i'm curious about is is.
00:25:34.110 --> 00:25:42.990 Graham Dobbin: What i've read is you've got to fill a unique take on the people that you've got around you the teams that you build around you to create that that that company.
00:25:45.360 --> 00:25:53.010 Graham Dobbin: Tell me more about it, I mean what kind of things i'm seeing is that there was maybe more fixed hours, it was not necessarily.
00:25:53.430 --> 00:26:02.970 Graham Dobbin: You know fixed vacation time people would have been more relaxed what is that, if one is that correct and, secondly, what is the, what do you think that does for for a startup.
00:26:03.660 --> 00:26:11.190 Marc Randolph: Well you're completely correct, I mean I don't know if how familiar, you are with the netflix vacation policy, for example, well there isn't one.
00:26:11.730 --> 00:26:16.770 Marc Randolph: And maybe you're familiar, of course, with the netflix expense policy well there isn't one.
00:26:17.400 --> 00:26:29.940 Marc Randolph: And maybe concern about the netflix travel policy well there isn't one you're kind of getting the idea that there really are no policies or there's one policy which is use your best judgment and.
00:26:30.900 --> 00:26:36.180 Marc Randolph: Actually I maybe it's probably best, but we can lead into everyone going what is he talking about.
00:26:36.780 --> 00:26:52.440 Marc Randolph: Because, after the break I love to explain to people exactly why that's the case, how we got there and actually why, in some ways it's so unusual for a company, the size and scale of netflix to have basically no policies.
00:26:53.040 --> 00:27:02.640 Graham Dobbin: Instead of sums it up by the show by talking about enforced change then environmental change that we've got around us, which is me businesses look at.
00:27:02.940 --> 00:27:18.660 Graham Dobbin: things in a different way things that were dismissed we didn't give trust the people working from home or except except they were just so many things know it's a it's a given way of doing business and also many that are almost but probably not going to go back to how it was.
00:27:19.320 --> 00:27:20.670 Graham Dobbin: And some yeah it is.
00:27:21.210 --> 00:27:31.710 Marc Randolph: You know these things that that management style, which you know netflix calls freedom and responsibility is not unusual for a startup mean that's by necessity, you.
00:27:31.710 --> 00:27:34.110 Marc Randolph: Have 100 things to do, and you have the resources.
00:27:34.110 --> 00:27:42.510 Marc Randolph: For 10 things, and so there is not time for command and control all you can really do is tell someone you know you see that mountain over there.
00:27:42.840 --> 00:27:47.850 Marc Randolph: i'm going to meet you at the top and two weeks and here's what you need to have done when you get there.
00:27:48.300 --> 00:27:54.240 Marc Randolph: And that's the last i'm going to see them for two weeks, and they may struggle, they may have overflowed river is they have no trail.
00:27:54.540 --> 00:28:02.520 Marc Randolph: heavier load but damn it they're going to figure it out yeah and they're going to show up and so is this person so is this person and.
00:28:03.390 --> 00:28:12.600 Marc Randolph: that's a tremendously liberating thing for someone to be given that level of freedom to solve the problem, as they see fit with the responsibility.
00:28:13.260 --> 00:28:22.560 Marc Randolph: Of following through on what they've been committed to deliver what gets companies in trouble is that that doesn't last and that you have a.
00:28:23.040 --> 00:28:41.280 Marc Randolph: Well, meaning CEO who someone's late to the top and go Sue we can't have this from now on, I need status reports every two days and everyone goes status reports or someone gets the top on time, but over spends all we can't have this a pre approval of all expenses over $500 and was.
00:28:42.300 --> 00:28:59.520 Marc Randolph: And what you do is build guard rails for people who don't have the judgment to make a decision about what's appropriate to spend or what is the timing required to do something and netflix experiment was can we do that for people we build the company for people with good judgment.
00:29:00.030 --> 00:29:13.200 Graham Dobbin: So we're going to explore that after the break one one thing that just jumps to mind as a very senior manager of a very large global company, the other week that said to be Reno KPI the high performance out of ourselves because of so many.
00:29:15.030 --> 00:29:21.360 Graham Dobbin: Rich justin I don't know how we reverses so we're going to look at what the practical application that will look like.
00:29:21.600 --> 00:29:35.760 Graham Dobbin: How did that help help netflix move on you're listening to the mind behind leadership alive and talk radio dot nyc my name is Graham dove in and we're speaking with the author of that all not work mark randolph will be back after this.
00:29:37.920 --> 00:29:40.080 Marc Randolph: Listening to radio.
00:29:40.320 --> 00:29:40.770 And my.
00:32:28.320 --> 00:32:35.250 Graham Dobbin: Welcome back it's Thursday night is New York we're speaking with mark randolph and just let me get a correction there it's called that will never work.
00:32:35.670 --> 00:32:45.960 Graham Dobbin: Say that will not work and the podcast is called that will never work, as well as the book and co founder and CEO of netflix.
00:32:46.890 --> 00:33:00.750 Graham Dobbin: And you built a culture around you so, what was the what was the reaction to to to building it in that way, no expense account kind of the measurements were were what's The end result, rather than necessarily how we get there.
00:33:02.370 --> 00:33:08.250 Marc Randolph: You know, I think, quite frankly, it's in some ways the secret sauce of netflix.
00:33:08.670 --> 00:33:17.250 Marc Randolph: Is that people are constantly saying how do I attract and retain the very, very best people, and especially in a high tech environment where.
00:33:17.640 --> 00:33:25.680 Marc Randolph: The productivity of the top two or 3% of a piece of talent, is not just two, to 3% better you know it's double a triple.
00:33:26.310 --> 00:33:39.300 Marc Randolph: And the answer is not ridiculous things like nap pods and fireman Poles and foosball tables and kombucha on tap and all the things you read about.
00:33:39.780 --> 00:33:55.620 Marc Randolph: it's fundamentally, what netflix learn is that people genuinely want a job, where they're treated like an adult where they're not in until ised where they're not told what to do, or given ridiculous policies and procedures.
00:33:57.240 --> 00:34:07.620 Marc Randolph: That in fact they're given the chance to make a real difference where they have freedom paired with responsibility and the second thing that netflix delivers.
00:34:08.250 --> 00:34:17.850 Marc Randolph: Is you recognize what's important to people is who you work with that you want to deeply respect your peers, you want to respect.
00:34:18.750 --> 00:34:27.930 Marc Randolph: The person you work for, and you know netflix is described itself has said, we are not a family, because it's not like you're ever going to fire someone in your family.
00:34:28.440 --> 00:34:36.780 Marc Randolph: We are a sports team and we're not a little league team where everybody plays and everyone gets a trophy, this is a professional team.
00:34:37.200 --> 00:34:44.280 Marc Randolph: Where if you aren't the very, very best person we can find for that position, we need to find someone who is.
00:34:44.820 --> 00:34:54.840 Marc Randolph: And our obligation to the rest of the team is to do that, that you can this to use it, I mean to use a part of me American sports since we're in a you know nyc.
00:34:55.440 --> 00:35:06.540 Marc Randolph: Is a you know it's your obligation to the second baseman, not to say Oh, the shortstops a good guy you know he's been with the team, a long time.
00:35:07.020 --> 00:35:21.780 Marc Randolph: Listen Okay, the ball goes through his legs a bunch but come on give them a break know my obligation to the second basement is to put the very, very best shortstop in that position, I can so that the team can win and netflix thinks about it, the exact same way.
00:35:22.830 --> 00:35:31.590 Graham Dobbin: Since I didn't have time to have a discussion when we're talking about teams is that person is not the right person for that team it doesn't make them a bad person it.
00:35:31.620 --> 00:35:33.840 Graham Dobbin: Just means that they're not right for that position that's all.
00:35:34.590 --> 00:35:42.240 Marc Randolph: Absolutely right, in fact, one of the things when you're having a business, which is.
00:35:43.470 --> 00:35:55.440 Marc Randolph: bill for people with good judgment, where you have removed all of the guardrails that frustrate high performers, you really can't have people who don't have good judgment.
00:35:56.130 --> 00:36:02.190 Marc Randolph: And it's really honest I was gonna say difficult but i'm gonna say it's impossible to know.
00:36:03.000 --> 00:36:08.940 Marc Randolph: When you hire someone how they're going to be in that new position, which means you're going to make mistakes.
00:36:09.270 --> 00:36:28.740 Marc Randolph: And so, just as important as building this culture for high performance, you have to be willing to recognize that you may have made a mistake, and you have to own up to it, but it doesn't mean you don't make the change, you need to change need to make, and similarly circumstances change.
00:36:29.070 --> 00:36:30.270 Marc Randolph: You know netflix just started it.
00:36:30.270 --> 00:36:45.660 Marc Randolph: For started streaming and 2007 they said, we need to build a streaming infrastructure and they went and found some of the brightest smartest people who really understood how to build streaming architecture.
00:36:46.320 --> 00:36:59.010 Marc Randolph: But not long after that netflix came to the realization that you know Amazon can do this way better than we can their money they've made it a core part of their business let's have them do it.
00:36:59.940 --> 00:37:11.910 Marc Randolph: And so, what do you say to these people who are now very highly well compensated people building your streaming architecture, all you can say is we're not the right place for you anymore.
00:37:12.990 --> 00:37:23.700 Marc Randolph: We can move you into a search optimization role, but it doesn't pay the same yeah and you're not going to be happy there let's find you let's help you find.
00:37:23.790 --> 00:37:25.440 Graham Dobbin: yeah a new position someplace else.
00:37:27.120 --> 00:37:33.720 Graham Dobbin: And that's The key thing to let but let's help them find something that they enjoy and they're good at kind of what we.
00:37:33.840 --> 00:37:34.800 Graham Dobbin: What we said earlier.
00:37:36.060 --> 00:37:37.740 Marc Randolph: i'm going to rant about something for a second.
00:37:37.800 --> 00:37:55.980 Marc Randolph: goal for the thing you should never do is this thing, and maybe you probably have more experienced that it was called a I guess a pip a performance Improvement Plan or something like that, but it's it's that usually in a larger company and I go I go Graham.
00:37:57.060 --> 00:38:12.420 Marc Randolph: Things aren't working out, so what we're going to do is we're going to write up a plan for you to improve with your benchmarks and performance objectives and we're going to meet once a week to go over it, and oh my God, that is, the Spanish Inquisition, that is.
00:38:13.740 --> 00:38:21.930 Marc Randolph: unusual punishment because listen, I know that eventually i'm going to fire you and you know that eventually i'm going to fire you.
00:38:22.320 --> 00:38:28.860 Marc Randolph: And everyone else we work with knows eventually i'm going to, but what we're going to do now is go through six months of kabuki theater.
00:38:29.460 --> 00:38:41.310 Marc Randolph: where you have to basically dangle on a rope, and that is the cruelest thing I can imagine it is so much better to sit someone down and say, Graham it's not working.
00:38:42.570 --> 00:38:54.240 Marc Randolph: I know that you are feeling frustrated because you're not able to accomplish to the level, you can tell, we need let's find a great place for you, and when a manager doesn't do that.
00:38:56.040 --> 00:39:14.250 Marc Randolph: there's two horrible things that happen either everyone in the whole department is going this grandma Lou and they're looking at mark and going either marketing marks are doing anything about it so either mark doesn't see it, which means he's stupid.
00:39:15.300 --> 00:39:32.700 Marc Randolph: blind or mark sees it, but won't do anything about it, which means he's weak and the reputation that you damage by not being willing to move someone who's clearly not the right fit the reputation you damaged your own.
00:39:33.510 --> 00:39:40.830 Graham Dobbin: it's really interesting because I remember when I moved to New York, and I have the boat performance improvement plans are but I remember the first person telling me about.
00:39:41.520 --> 00:39:47.700 Graham Dobbin: Okay i've heard of these before, but what do they mean here, and he walked me through it and they said that means i'm going out the door.
00:39:48.720 --> 00:39:48.960 Marc Randolph: Is.
00:39:50.130 --> 00:39:57.750 Graham Dobbin: Really, a knicks the explain the new what was about to happen and i'm i'm a great believer in if there's a tough decision on a tough discussion to be had.
00:39:57.990 --> 00:40:03.450 Graham Dobbin: Have as quickly as possible, because most most of the time, both parties aren't looking forward to.
00:40:03.960 --> 00:40:18.450 Graham Dobbin: there's that kind of delay and the noise coming have it as quickly as possible, it doesn't mean, you see, we can care, we can do it now, you know we can do it in a good way, but if it's if it's the happiness to happen mmm hmm so we're building.
00:40:18.480 --> 00:40:27.660 Graham Dobbin: we're building this culture you've got you've got netflix and it and it and it's it's moving forward a bit the it's evolving from what you thought originally.
00:40:29.580 --> 00:40:33.030 Graham Dobbin: So the product, the service and everything is beginning to change.
00:40:33.450 --> 00:40:47.910 Marc Randolph: yeah there's an that's the understatement of the year, I mean that the you know when I was pitching this idea, the idea was video rental by mail, this was in 1997 98 so streaming was still nine years in the future.
00:40:48.570 --> 00:40:55.380 Marc Randolph: You this was you want a movie well we're going to mail it to you are going to mail it to you on a little DVD and an envelope.
00:40:56.880 --> 00:41:04.830 Marc Randolph: And everyone said that'll never work and, yes, we spent six months we built this website, we got a copy of every single DVD we forge partners.
00:41:05.130 --> 00:41:12.570 Marc Randolph: To DVD manufacturers for coupons in the boxes and with great fanfare we launched this company and Lo and behold, it didn't work.
00:41:13.020 --> 00:41:34.110 Marc Randolph: No one would rent from us, and thus began this year and a half long journey of trying to figure out some way to get video rental by mail to work and we try to hundreds of things, if not thousands of things testing relentlessly and there was a process here.
00:41:35.280 --> 00:41:45.750 Marc Randolph: which you know, at first, I was this perfectionist, and so I would construct these perfect tests with custom photography and lovingly crafted copy.
00:41:46.470 --> 00:42:00.840 Marc Randolph: And it would take two or three weeks, and it would fail and we realized we wasted two or three weeks and we go faster faster and faster pretty soon we're testing, you know for things a day and there's dead links and the one image and we're crashing the site.
00:42:01.860 --> 00:42:14.130 Marc Randolph: And the reality is it didn't make a difference that if it was a bad idea that even the perfectly crafted test wasn't going to change it, but if it was a good idea.
00:42:14.640 --> 00:42:26.160 Marc Randolph: It immediately through and i'm telling you this whole story, because that insight transformed netflix it was this realization that it was not about having good ideas.
00:42:26.700 --> 00:42:43.650 Marc Randolph: It was about building this process in the system, and this culture for trying as many bad ideas as we could and through that iteration you know, after a year and a half we finally stopped.
00:42:44.580 --> 00:43:00.900 Marc Randolph: and one that actually Lo and behold work much door amazement, and it was completely crazy counterintuitive idea that said let's not have due dates let's not have late fees.
00:43:01.710 --> 00:43:15.810 Marc Randolph: let's let everyone keep the movies, as long as they want and when they're done this mail it back and we'll replace it with another end we're not going to charge you each time you swap swap as often as you want let's charge us subscription fee.
00:43:16.830 --> 00:43:24.030 Marc Randolph: And we are wow when we tested that boom, I mean it was amazing and that mark the moment where we.
00:43:25.230 --> 00:43:25.680 Marc Randolph: weren't.
00:43:25.830 --> 00:43:34.140 Graham Dobbin: After the break we'll talk about what that moment men and kind of what what what went from that unexplored just some maybe some of the more famous or infamous.
00:43:34.740 --> 00:43:43.890 Graham Dobbin: stories that are around that period of time we're speaking with mark randolph, who is the author of that will never work and all sorts of podcast.
00:43:45.240 --> 00:43:48.360 Graham Dobbin: you're listening to the main behind leadership we'll be right back after these.
00:46:10.200 --> 00:46:16.740 Graham Dobbin: Welcome back to the main behind leadership talk radio dot nyc we are speaking with mark randolph and mark.
00:46:17.610 --> 00:46:35.400 Graham Dobbin: of a sudden, we go from that this startup we're trying things this great idea that we've got didn't quite work of it we keep we keep on adjusting it to over some quite a relatively short period of time later in this the businesses really moving forward, how did that feel.
00:46:37.590 --> 00:46:51.720 Marc Randolph: And it's certainly an incredibly exciting it changes the whole dynamic of the company, because now you're no longer in this fever search for the repeatable repeatable scalable is a small now you're trying to hold on.
00:46:52.380 --> 00:47:06.600 Marc Randolph: But I promise you really don't have much time to sit back and enjoy the ride because, with growth comes entirely new challenges, obviously the fundraising requirements go up dramatically.
00:47:07.140 --> 00:47:25.500 Marc Randolph: The how you manage the organization changes dramatically you building levels in you're constantly fighting off distractions of now that you have the opportunities to do new things you're having to constantly resist do we enter Canada, do we do this, we do games.
00:47:26.700 --> 00:47:42.090 Marc Randolph: you're constantly having to say we've got to make decisions about what not to do so it's just a different a different structure, and I think in some ways, we were caught, it was complicated by the fact that we had chosen, so to speak, a subscription model.
00:47:43.110 --> 00:47:54.510 Marc Randolph: Because a subscription model has some some huge benefits, but one of the negatives of the subscription model is that the dynamic, is that you, of course, pay to acquire the customer upfront.
00:47:54.900 --> 00:48:01.920 Marc Randolph: And you pay all those prices those costs day one, and then the revenue that pays that back comes over.
00:48:02.790 --> 00:48:12.990 Marc Randolph: 12 1824 months after that, which means that when you have huge success when you have a huge acceleration of customers coming in.
00:48:13.350 --> 00:48:25.620 Marc Randolph: What you have is an even greater acceleration of money flying out the door yeah and that put a huge amount of pressure on the company to fundraise at a level we had not even considered before.
00:48:26.670 --> 00:48:29.700 Marc Randolph: And that was especially challenging when all of a sudden, you bump into.
00:48:30.750 --> 00:48:43.470 Marc Randolph: spring of the year 2000 which people like you and I remember, but i'll remind people that was the time when the.com bubble yep hopped.
00:48:44.550 --> 00:48:46.260 Marc Randolph: Quite aggressively.
00:48:47.460 --> 00:48:53.940 Marc Randolph: which was a terrible time for a company who so dependent on cash to keep growing to have happen.
00:48:55.980 --> 00:49:01.710 Graham Dobbin: Actually, this is just a really quick question, something you said earlier about the first job and with the with the records.
00:49:02.010 --> 00:49:11.070 Graham Dobbin: That that influence when you were doing mail order and you were sending it the lists of records and other thing is that is that, where this came from was that one of the influences.
00:49:11.730 --> 00:49:13.800 Marc Randolph: Absolutely, in fact.
00:49:14.820 --> 00:49:23.700 Marc Randolph: When I look back the thing that I kicked myself the hardest about is that it took me a year and a half to try a subscription model.
00:49:24.060 --> 00:49:39.030 Marc Randolph: Right I knew that business I had founded two magazines I knew it circulation subscription inside and out but, like everybody else I was like subscriptions for video.
00:49:41.100 --> 00:49:45.330 Marc Randolph: And it was only one got desperate that we decided to try it, but I wish i'd done that, sooner.
00:49:45.570 --> 00:49:56.100 Graham Dobbin: So let's talk about what was happening at that time and what was the what was the standard way that we access videos or movies, or something like that which was a company called blockbuster.
00:49:56.940 --> 00:50:06.270 Graham Dobbin: And it's interesting that they some younger listeners might not actually recognize what what what what blockbusters wasn't how big it was.
00:50:07.290 --> 00:50:20.700 Graham Dobbin: think it really ironic that there's a there's a there's an excellent documentary on netflix that the woman about the last what was the big be taught me through there's a there's a famous story about a meeting with blockbuster.
00:50:22.080 --> 00:50:25.080 Graham Dobbin: didn't that happen yeah that happened if it did.
00:50:25.590 --> 00:50:35.940 Marc Randolph: It is the is the outgrowth of the dilemma we found ourselves in when all of a sudden, our source of revenue is completely cut off and.
00:50:36.960 --> 00:50:49.110 Marc Randolph: We didn't know how to get out of this and we decided at that time that we were going to do, the thing that prudent entrepreneurs do called pursue strategic alternatives.
00:50:49.710 --> 00:50:51.180 Marc Randolph: Because the code for.
00:50:51.690 --> 00:50:54.000 Marc Randolph: We have got to sell this sucker and fast.
00:50:57.270 --> 00:51:02.370 Marc Randolph: And our obvious strategic alternative was blockbuster and, as you alluded to, they were huge.
00:51:02.400 --> 00:51:03.240 Graham Dobbin: You know, they were.
00:51:03.540 --> 00:51:16.800 Marc Randolph: 60,000 employees and they had 9000 stores and they were on they're going to be $6 billion in revenue, and so we tried to get this meeting to pitch them on buying us nothing.
00:51:17.310 --> 00:51:27.570 Marc Randolph: You know it went for months without us hearing a peep and the crazy ironic part of the story is they finally did call and they called we were on a corporate retreat.
00:51:28.020 --> 00:51:36.720 Marc Randolph: In a little ranch in the foothills outside of Santa Barbara California and I was there, all I had with me was shorts and T shirts and flip flops.
00:51:37.380 --> 00:51:46.860 Marc Randolph: And that's when they go we'll see you tomorrow in Dallas I remember read ny looking at each other and go and there's no way we're going to be able to.
00:51:47.760 --> 00:51:55.710 Marc Randolph: morrow and we ended up doing what you would do when you're basically about to quite a business, which is chartering a corporate jet to fly us to.
00:51:55.890 --> 00:51:56.940 Graham Dobbin: To Dallas honestly.
00:51:57.000 --> 00:51:58.620 Graham Dobbin: Something I do on a regular basis.
00:51:59.130 --> 00:52:05.310 Marc Randolph: Exactly and all of a sudden finding ourselves in this huge conference room.
00:52:07.110 --> 00:52:17.100 Marc Randolph: In the 17 store or this huge glass and steel building and i'm there in shorts and a T shirt and read is there and a hawaiian shirt and i'm jealous because he hasn't button.
00:52:18.300 --> 00:52:25.290 Marc Randolph: And the income, the blockbuster folks don't we pitch to them, we should combine forces that will run the stores they'll run.
00:52:25.770 --> 00:52:36.360 Marc Randolph: Better on the stores will run the online business will do a blended model and everyone lives happily ever after and it was going great.
00:52:37.140 --> 00:52:48.780 Marc Randolph: Until they asked the big question, which is how much what are we going to pay for you and, at the time we had raised a cumulative total $50 million.
00:52:49.560 --> 00:53:02.850 Marc Randolph: And so we have to put this in the plane and decided will be nice elegant number to pay off all the investors in one fell swoop so read leans forward and goes $50 million.
00:53:04.470 --> 00:53:18.300 Marc Randolph: And they laugh at us, I mean maybe not out loud, but it was on the whole idea of Sir that this little.com on the verge of going out of business would ask for $50 million and.
00:53:18.870 --> 00:53:28.680 Marc Randolph: I gotta say it was a terrible feeling in the plane flying home because we were so pumped it was self evidently the right thing to do for them.
00:53:29.580 --> 00:53:35.790 Marc Randolph: But now, not only we're not going to save us, I mean they were going to compete with us and.
00:53:36.630 --> 00:53:47.010 Marc Randolph: I sat there thinking you know I know there's no easy way out, we have thought of everything, and this is one of those cases that my dad would often say you know, sometimes smart.
00:53:47.580 --> 00:54:04.860 Marc Randolph: The only way out is through that we would have to solve this problem on our own, and it required taking some pretty hard steps, but eventually we prevailed, we did to take down blockbuster.
00:54:05.910 --> 00:54:17.490 Marc Randolph: The company with 9000 stores, as you mentioned, is down to its last store the company that blockbuster could have bought for $50 million as a market cap of what $200 billion.
00:54:19.470 --> 00:54:21.660 Marc Randolph: it's interesting outcome.
00:54:21.990 --> 00:54:36.840 Graham Dobbin: A story mark we've only got a couple of minutes left and i'm just going to kind of work where can we catch your podcast that will never work where's the where's where's the best place, I believe you also you, you you you've done someone clubhouse as well.
00:54:37.410 --> 00:54:47.910 Marc Randolph: So let us know how we can get it briefly, you know, this is, this is not an interview podcast I mean it's people do that so much better than me yourself included.
00:54:48.930 --> 00:55:06.240 Marc Randolph: What I do is just try and do in public, the thing that i've been doing for 20 years, which is mentor girls printers so my podcast is essentially me meeting with real life, people who are in the process of trying to turn their ideas into reality.
00:55:07.290 --> 00:55:14.610 Marc Randolph: And some fascinating things come out of it, and it is available, as you might imagine any place you prefer to get your podcasts.
00:55:14.640 --> 00:55:24.960 Graham Dobbin: Nice that will never work, and also the book that will never work, the birth of netflix and the amazing life of an idea at my brand off.
00:55:25.320 --> 00:55:38.400 Graham Dobbin: What an incredible story, I feel that we could be chatting for another couple of hours, at least, but unfortunately we've come to the end of the show i'd love to have you back on i'll check your and clubhouse and mark randolph.
00:55:39.960 --> 00:55:48.210 Graham Dobbin: Silicon Valley entrepreneur investor mentor and the first CEO of netflix Thank you so much for your time this evening.
00:55:49.290 --> 00:55:50.670 Marc Randolph: A pleasure, Graham thanks so much.
00:55:51.180 --> 00:55:56.460 Graham Dobbin: Take care we'll see everyone again next Thursday talk radio dot nyc good night.