- Netflix co-founder Marc Randolph recently published a book about how he was the head of the company in the early days and the journey that happened since then. Here are some of those details.
In 1997, Netflix was founded by Marc Randolph and Reed Hastings. Reed Hastings is still CEO of Netflix, but Randolph stepped down in 2003.
In an interview with Entrepreneur, Randolph acknowledged that the decision for him to step down as CEO and have Hastings succeed him “was probably the best decision I ever made at Netflix.”
In 1999, Netflix was having growth issues and stalling. So Randolph stepped aside to become president and then left the company several years later. Under Hastings, Netflix became the streaming and video mailing giant it is today.
Randolph revealed this major decision in a new book called “That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea,” which details the history of the company. The book includes details about how Netflix went from an eight employee company in 1997 as DVDs were becoming popular to the streaming giant it is today.
Interestingly in 1998, Hastings and Randolph considered selling Netflix to Amazon while meeting Jeff Bezos in Seattle. Bezos reportedly offered somewhere in the ballpark of $14 million to $16 million, but Hastings voted against selling the company. Netflix ended up turning down the acquisition and then doubled down on rentals while closing down its sales business. Amazon got into DVD sales so Netflix made the right choice by pivoting.
In the book, Randolph also revealed how Hastings convinced him to move from the CEO position to the president. Hastings went into his office and started to run through a PowerPoint making the case. At first, Randolph did not understand where the presentation was going. Hastings’ presentation started with the achievements accomplished so far and then he put in details about what is not working. Then he detailed what the positive benefits will be under his leadership.
“At one point, I remember saying, ‘Reed, I can’t believe you’re coming in and proposing that you take over.’ And he says, ‘No, no; you have the wrong impression — I’m proposing that we run the company together.’ He’d come in as CEO and I’d be president, and we’d do things jointly. I think his point was that the company would be infinitely stronger with two people there full-time working on it rather than one,” said Randolph in the interview with Entrepreneur.
After the meeting, Randolph sat on the back porch with his wife and had a glass of wine. And Randolph realized Hastings was right about the company being stronger with both of them at the helm. Randolph had to choose which dream was more important: retaining the CEO position or making the company more successful. Randolph recognized that his obligation as the head of the company was to serve people who were working crazy hours in order to make the dream of making the company bigger come true.
Why did Randolph decide to leave Netflix in 2003? Although Randolph deeply loved the company, it was not something he loved doing. Randolph enjoyed building companies in the early stages so he helps entrepreneurs at the ground level.
Another reason why Randolph stepped down is so he could sell his shares without being worrying shareholders. If a president and board member was unloading shares, then it could cause the stock price to drop. At the time of the IPO, it is estimated that Randolph’s shares were valued at about $250 million, according to Forbes.
One of the companies that Randolph mentored is a business intelligence company called Looker. Randolph had joined Looked when the company launched in 2012. And Randolph had invested in the seed round of the company and was the first employee with the title ABC (Anything But Coding). Alphabet acquired Looker for $2.6 billion earlier this year.
Photo Credit: MarcRandolph.com
Interested in buying Randolph’s book? You can get it from Amazon:
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