OWNER’S PROFILE paying
OWNER’S PROFILE paying late return fees on rental VHS tapes and so, boom! There’s Netflix”—makes for a great story. And, since his great-uncle was Edward Bernays, widely considered to be the father of public relations (making Randolph a distant relative of Sigmund Freud, too) perhaps that’s not surprising. “Edward didn’t exactly ever sit me on his knee and tell me it was all about the art of persuasion, but I do wonder if it was total chance that I had a career in marketing,” Randolph muses. But, he stresses, the problem with the lore of epiphanies is that it places too much emphasis on the idea and not enough on the action. “The skill really is not in coming up with ideas. Ideas count for shit. It’s about how quickly and cheaply you can test them, which is so much easier to do now,” he says. The lore too belies “the many dead-ends and experiments required [of a start-up], the very messy full story that nobody wants.” And it creates a mythology that dissuades many people from getting going at all. THAT’S BAD ENOUGH, without the many other reasons people find not to break ground. “And I’ve heard every possible reason why people don’t do something with the idea that they have—that they need to do more research, or quit their job, or raise money, none of which are genuine to me,” says Randolph. “The reason people don’t start is that they can’t accept the risk. They want to look around the next corner, without actually getting to the corner first,” he adds. “You can’t learn a language from a book, either. At some point you have to go out and speak it, be a 40-year-old feeling like a four-year-old making an ass of yourself.” Netflix, Randolph notes, started by testing whether a DVD could be posted locally without damage. It could be, but then they realised that posting between U.S. states typically meant much rougher handling. So they pressed on and adapted. There was the necessarily mad rush to decide on a name—TakeOne and NowShowing were rejected—and Netflix was opted for despite deep misgivings that it sounded slightly dodgy. “If you remember the ’70s you know that pornographic films were ‘skin flix,’ with an X, and anything with an X seemed a scary choice to us then,” says Randolph, “and it still sounds vaguely porny.” And then, after over 1,000 invitations to invest were declined, there was the small matter that, two years in, the business was hemorrhaging money, such that at one point they approached the then daddy of VHS rental, Blockbuster, to see if it would buy their idea of renting videos by mail. Blockbuster, echoing Decca’s fateful decision to turn down The Beatles, said no. Surely Randolph must look back on this, given Netflix’s now B-plus annual revenues, with a touch of glee? “Actually, I think of that now more as having dodged a bullet,” he explains. “At the time we were very invested in a deal as being a way out of desperate straits, with zero hope of venture money. When Blockbuster essentially laughed at our M price tag there was just terror: They weren’t just not going to save us, they were going to compete with us. It was a sombre ride home. But I still don’t get any joy from seeing another business go down because of our efforts.” Indeed, the moment arguably prompted a refocusing on the element that really made Netflix work, turning it into a subscription service—and since Randolph started out in direct marketing and mail ordering and later founded the US version of MacUser magazine, he still can’t quite believe this didn’t occur to him much earlier. Subscription services, powered by the internet, have, of course, since become a benchmark model for countless businesses. “The thrill has to be in trying to solve these complex puzzles day to day.” 40 NetJets
COURTESY MARC RANDOLPH Perhaps the greatest lesson Randolph might impart though—refreshingly, since it also speaks to non-entrepreneurial people—is that building businesses may be lauded in contemporary culture, but nonetheless isn’t the be all and end all. Yes, it’s better to have more money than less money, Randolph concedes. But the notion that success in business means “something special will happen in your life is wrong, because you get to the summit, and all you find out is that it’s a false summit and that there’s another one ahead of you,” he says, employing a suitably outdoorsy metaphor. “Netflix’s first aspiration was to be the size of one Blockbuster store, and then, before you know it, it was to be Blockbuster—it never stops. The thrill has to be in trying to solve these complex puzzles [of business] day to day.” That’s what drove Randolph to launch all manner of proto-businesses as a kid, encouraged by his easy-going and open-minded parents, his father a nuclear engineer turned banker, his mother running her own real estate business. “If the precursor to being a serial killer is torturing small animals, then for entrepreneurs it’s starting lots of clubs,” he quips. But, while perhaps it’s a cliche, it’s nonetheless true that he counts his greatest achievement as having built businesses while maintaining his marriage of three decades—too many entrepreneurs have as many ex-wives as they do start-ups under their belts, he’s noted—“while bringing up kids who, as far as I know, like me.” “Having a balanced life is just the hardest thing. Start-ups are 24-hours-a-day things and I think it’s terrible to see entrepreneurs sacrificing their private life to them. That understanding came late to me: It wasn’t until I was 30 that I realised I was on a bad track and working too hard,” says Randolph, who consequently instigated an inviolable, weekly date night with his wife. HE RECALLS a period during the early days of Netflix when he was flying four days a week, feverishly running for planes all the time. He may not believe in epiphanies when it comes to business ideas but he certainly had one when it came to how he wanted to live. “About half the time the plane had already gone [by the time I got to the gate], about 49% of the time it was still just sitting there and I got on board all panting and sweaty, and I think in only one percent of cases did getting the plane, or not getting it, actually matter,” Randolph explains. “I vowed then that I wouldn’t run for a plane again. “That’s a metaphor for what goes on in business too—that misleading idea that you have to make every decision, that you have to oversee everything,” he adds. “[People who do that are] running for planes, when 99% of the time it just doesn’t make any difference.” There’s a pause, and a smile, maybe in recognition that, all the same, he made it— and made it big. “Now, of course,” he says, “I literally don’t have to run for planes for a whole other reason.” MARC OF ALL TRADES Randolph has expounded on his ideas on entrepreneurship via a book and a weekly podcast, which can be found at MarcRandolph.com and all good podcast hosts. NetJets 41
