#1521 The Bloke Who Created Netflix - Marc Randolph

Having spoken to a lot of famous people over the years, a lot of rich people, a lot of high profile people, a lot of successful people. Some people do things like this podcast or interviews because there's some kind of commercial advantage or they're required to by their publisher, and with Mark, there was none of that. He definitely did not need to talk to me. Of all of the meat your platforms that he has been on through his journey and over time, way bigger, way better than me, he definitely

didn't need to talk to me. But I love the fact that he was so engaged, so real, so interested in me, the bloody shitkicker from Latro Valley. And yeah, I look back on this as one of my fondest memories on my typ journey. Anyway, here we go, a bit of a blast from the past, Mark, Randolph and Me waxing lyrical. Enjoy your day, enjoy the chat, and I hope you have a great week. Good eight team, Welcome to another installment of the You Project. Hello, Tiffany and Cook.

How about this disproportionate yes is for a million podcasts rather than what comes in from the rest of the world.

into something. I heard you talking about. It's interesting because I thought, I don't know how much Mark and I are going to have in common. Then I heard you talk and I went almost everything in common because I'm always talking about people's inability to start or lack of willingness to start, and then sometimes when we do start, depending on what the endeavor it is. Endeavor is whether it's losing weight or changing a habit or behavior, or

building a brand or business. You know, invariably a lot of people stop not long after they started. But it seems that there's that being able to persevere and get uncomfortable and keep getting uncomfortable and being okay with you know, less than ideal outcomes all the time is part of success as an entrepreneur and in business in general.

But because you're doing something that no one else says done before, usually it's extremely unlikely you're going to get at rate the first try. So you have to couple that predisposition to action, with persistence, with the willingness to say I'm going to keep on trying. I'm going to try different ways. It may take me one hundred tries, but eventually I'm going to figure this out. It's absolutely you've got to start, but you also have to keep going.

This is how business works, this is how human in behave you guys is a wife from academia. It's been in the middle of the process, you know.

use a footy analogy. You know, you watch the We watch these guys play and they do that thing where they're running on the field and every I don't know, ten twenty meters they have to bounce the ball and of course it's this oblong shape. And you can get someone to show you the right way to do it. You can watch a YouTube video and the right way to bounce a footy. But if you think that's going to help you bounce a footy, you're out of your mind.

You have to go out and you've got to run laps around the field the hundreds and hundreds of times before you can do that consist. And that is absolutely the same thing with entrepreneurial skill. Sure read up, sure take some classes, major in it in school, whatever floats your boat, But fundamentally, the way you're going to really learn how to do these things is to actually get

out and do them. And that's the trick is figure out some way to start applying these skills when you're young, or when you're in a low risk circumstance, or when you're not having your mortgage and your car payments and your kids private school tuition dependent on it.

first time. Everyone's a white belt, and you can't become a black belt without doing the work and doing the tests and enduring and surviving and getting hurt and getting uncomfortable and falling down and getting a blood nose, and and you know this is where resilience and strength and awareness and understanding and skill develops. Like you didn't start Netflix as it is now. That was nothing like I'm sure the original idea or the genesis of from where it came.

I want to be an entrepreneur, all right. I had to learn how to go in and pitch a VC for two hundred and fifty thousand dollars or a million, which is what you see them doing on Shark Tank or what you read about in the books or seeing the movies. But if you try and have that be your very first attempt, of course you're going to fall flat in your face. You've got to start off gradually.

You've got to start off with simpler things. You've got to scale your aspirations to your ability level at the beginning, and then to jump into your Other point is you've got to recognize that what I think is going to work is wrong. That the more time I try and toss this idea around my head, because I don't want to start and fail, I've got to get it right. You are never going to start going to figure it out.

You're just going to have this perfectly formed, beautiful idea in your head, which the minute it collides with reality is going to instantly tell you what a waste of time it was solving these problems in a vacuum.

up with an idea or a hypothesis, a construct. Then you try something, you create a plan around how you're going to test that. Then you do something, then you get some data, then you evaluate the data, then you reassess, and then you go again. I mean it's really in some ways it's very analytical, scientific, methodical process.

versus pink. So it requires this combination of things. But fundamentally, you're right, there is a playbook, and the playbook is this process of test repeat learn test, test learn, repeat, test learn repeat. You know, and you alluded to that very beginning, and this was you know, when we were start before we started Netflix. It certainly wasn't even Netflix.

When my business partner, Read Hastings and I were trying to figure out what was the next business we were going to start, we had a million different crazy ideas and anything we came up with was going to have to pass the test of was there an element of reality to it? And the only way to figure that out was to collide it with reality. And so, for example, this is back in nineteen ninety seven, and this crazy idea that we had was not streaming video. The crazy

idea was can we do video rental by mail? Can we do what Blockbuster? Which I believe they had in Australia as well, So we do that idea. It was a terrible idea, and it was largely a terrible idea. One of the six hundred reasons it was a terrible idea was that in nineteen ninety seven video came on the VHS cassettes. I mean, tiff for those of you of you your generation, you know, it's this big, square,

plastic thing that a movie came on. I know that's hard to envision, but certainly it was not something you were going to be able to mail to somebody's house, which was part of the idea. But here's the entrepreneurial thing is that one day Reid brought up that he'd heard about this technology called the DVD, which was this thin, little flat piece of plastic that a movie could come on.

And so the idea came up, this might actually now allow us to do video rental by mail, because mail and give me a plastic we could use the post office. So rather than saying, oh, what a great idea, and then begin imagining this future, we said, we've got to

validate this, so quick test. Turn the car around. We're commuting to work when this idea popped into our heads and turn the car around, and immediately said, let's validate whether at least the fundamental premise and can I mail a disc to somebody and have it arrive at their

house unbroken? And went to try and buy a DVD and couldn't find that, and decides to substitute a CD, a music CD, and mail the CD to Read's house and found out in less than twenty four hours that yes, indeed, you can mail a CD to someone and it gets to their house quickly and it gets to their house unbroken, and most importantly for our purposes, it got there for

the price of a postage stamp. And it's that process, one time after another after another after another that ultimately is leads you on this twisting, turning route that you never anticipated, hopefully to the goal of any entrepreneur, which is the repeatable, scalable business model.

the podcast is called That'll Never Work. It's because that's was drilled into me over and over again, that this stupid idea will never work.

eventually that would go away. But we also could not build a business all about streaming because it was impossible. There was no content, The infrastructure wasn't there, digital rights managements weren't robust enough, and so if we had come out with a streaming company, then we would have gone out of business. So we had to say, how do

you position this? That it works now, but that every piece of equity we build in our customer relationship, everything we learn about what they like and don't like will be applicable when the world changes. And so way back then, we decided this was not going to be DVD company. It was not a streaming company. It was a company that was going to help you discover great stories. And this leads me full circle to your question, and how

has a business model changed? It's never changed. On day one, it was how do we help you discover great stories. At the beginning, of course you discover great stories because we had every DBD available. And then eventually we help you discover great stories by creating deep content and eventually helping you find more clever ways to discover it and then taste algorithms to predict it. And then as it got more convenient to find different ways to deliver it

to you, we did that. But at the core, at the heart of Netflix, what drove every decision about what should we prioritize was help you discover great stories. And so that's never gone away, and people look at what's happening now. Of course, every content company in the world recognizing that this streaming business is kind of the way

to consume content, and Netflix has this huge lead. And it's not just because We've been streaming since two thousand and seven, so have you know what thirteen fourteen years had started. But because we've been establishing this direct relationship with the customer founded on discovering great stories since nineteen

ninety eight. And that's a really, really hard thing for companies which have always delivered their content by sending a real to someone who just plays it in a darkened box for people they don't know.

get to solve really interesting problems with really smart people. Yeah, you can do that at any scale. You could do that with how do I make my long wine business more successful? How do I find new customers? How do I do this in a way that those other guys aren't doing it? Yeah, that's what That's what motivates me. That's what I think is the secret source of entrepreneurship, not the scale. And by aspiring to only think that scale counts, you'll God, that's it's like saying you don't

climb it. There's a dumb analogy. You don't climb Everest. By just climbing, you start. You're starting in the foothills and it takes months. And listen, starting a big company, you can't aspire to be Nike or Netflix. And maybe if you are Apple or AT and T and you've got maybe a couple of billion dollars sitting around, then you have some incredibly talented people, one hundreds of thousands of them but no, you got to pick a niche. You got to pick something small. You got to pick

something that you can handle. You got to pick something that's within your realm. But if you're clever, you pick one that if I get this right, the things I focused on will allow me to take the next step. And if I get that right, in other words, if I can mow my neighborhood's lawns correctly in this good way, there's two more neighborhoods next door. Wouldn't that be incredible? And now all of a sudden, you're doing three neighborhoods.

You go, gosh, I wonder if I could do this whole half the city, if I did trucks and this, And then you go, maybe I could do a second city, and you know, and then eventually you can become the nationwide lawn care service. But if you start out when you're mowing two people's lawns, you'll be with You're going, oh, I need to invest in a fleet of trucks, and how do I move the fuel from here to there? And you know what a waste of time to solve

those problems? Just more one person's line better than the guy who was doing it before and focus on that for a while.

And we ended up and we didn't, certainly not Netflix. But I had four gyms and I employed five hundred trainers over twenty five years, and we went quite well, and we had a really good brand in the fitness industry. But my main driver mark was I don't want a boss. I just didn't want to work for somebody. That was my motivation was pursue it. To your earlier comment, your honor was I just want to work when I want

to work and do what I want to do. I'm not lazy, I'm actually quite driven, but I don't want to spend half my day doing things that I hate or things that people want me to do that I actually think are inefficient. And so from when I was, you know, really twenty early twenties, I spent my life trying to strategize around how I could not have a job for most of my life and the last time

I had a job was thirty one years ago. So and of course I wanted to make a few bucks and have a good lifestyle and all of that, but for me, it was very much about just being able to develop the things I wanted the way that I wanted.

I had to rush in and do them. And luckily for me, I've always found that whole process fascinating. Of trying to solve these problems that no one's really been able to solve before. That's the fun part for me, and I'm incredibly fortunate that that actually does pay a living wage. Otherwise, you know that aforementioned Van seven eleven that could be you. It would have been a big part of my future and past.

are doing. We're maybe not successful at this, and so I have to And so now, of course I do recognize when I'm doing these things, but it took me a long time to begin going what does disting? What are the common denominators that allow people to have crazy ideas eventually turn those into reality? What are those steps when I you know, I wrote the book I wrote That Will Never Work about those early years of Netflix.

I wrote it sixteen years after I left Netflix, and it took me that long because you sometimes need that distance to really recognize how much of this was what I did, how much of this was just lucky, how much of it was my contribution, and how much of what did I do wrong? What could I And that's a combination of being able to look back honestly but

also being able to think about it more clearly. So there's some things I do think about as I'm doing them to discipline myself, but quite frankly, less on the entrepreneurial side and more on the balance side, more on how do I keep my life in balance that I think about all the time, and I think about how I think about it, and the actual entrepreneurial stuff is less analytically driven.

But as you said, then you arrive down the track and one day you're fifty or whatever, you're sixty, and you're thinking about, oh, how do I actually how do I break that down so I can teach someone? So you know, like one of the things that I do is I teach I train speakers to speak because I corporate speaking. I do a lot of it, and then when I first started teaching them how to speak, I go, I don't even know how I do it because there's

no strategy. Like I invariably get up with no notes and talk for an hour or two hours and I'm in flow and I love it and it's fun and there's no nerves. It's just joy and I create an experience. But I've never I never planned that, So then when I had to teach someone how to replicate a version of that, it took me forever to figure out what I actually do. And maybe that's the chill is teaching others to, I guess, strategically do what you naturally do.

being who I am. And it is only after the fact when you look back, when you're trying to say, how do you begin to be helpful to pay it forward? How do you help give real advice which is not just bs to other entrepreneurs. Do you say, I've got to go figure this, really think through what am I doing? How am I approaching this? And then the hard part is then how do I coax someone into being able

to do that? And sometimes that's tricky. The whole the thing we've talked about multiple times today, which is that just starting that taking that risk. You can say it all you want, you know, you can put it up on the Instagram, quote panels all you want, but fundamentally, it's against people's human nature to want to do something which has the risk of them looking stupid and think that's a hard thing.

We're enamored with the idea of personal growth and personal development, and we love quotes, and we love mantras, and we love posting things on the bathroom mirror, and we love sunsets and puppies with nice quotes, but you know, like the reality is that life and business and relationships and developing things is just sometimes it sucks, and it's messy, and it's uncomfortable, it's unfamiliar, it's uncertain, it's hard, it's

you know, and sometimes it's glorious and awesome. But you know, this is getting people to step out of their holding patent or their groundhog diet and into the unknown, the unfamiliar, the uncertain, and the uncomfortable. That's the challenge. It's not that they don't have the ability. I don't think.

You have to then teach by example. I suppose, yeah, I mean I'll give you us a quick example, you know, for and again, I know we can talk about this a little bit later in the pod. But you know I'm on the podcast I'm doing, I'm that will never work podcast. I'm not interviewing celebrity entrepreneurs. I'm not interviewing

people do that way better than I do. What my podcast is is sessions of me mentoring unknowns, early stage entrepreneurs who are stuck, who are trying to take their idea, get it out of their head, who are trying to turn their side also into a real business, or trying to hit the real business next level. But what I'm doing really is saying I could put on Instagram the trick is, you know, to quickly, cheaply and easily clyde

your idea with reality. Well, good for me. But what I'll do in the podcast is then walk someone through how how in my particular circumstance do I think that through?

How do I isolate the one component which is really the puzzle and figure out a clever way to try that, And hopefully by having people listen to me doing that, to walk someone through to help them discover how to make that step, and not just with turning ead into reality, but for all the other little principles of entrepreneurship it's coaching people and any people listen in, I hope is the valuable piece of what I'm doing.

called How I Built This? Have you been on there?

let's plug it now. Anyway, we'll do it anyway. In our show notes. But the podcast is called that will Never Work? How many episodes?

And so I'm making my mistakes in public, which is that I'm basically learning not just how to how to do this, not just technically, but what's the right way to speak to people? These things actually come through and mean something to somebody, Then how do you promote them, how do you publish them? How do you engage with all these little pieces? And having a slower velocity allows me to learn from my mistakes at a reasonable pace without me having to be seven by twenty four on it.

There is my excuse and I'm sticking to it.

I think that probably that's around fear a lot. So for people that are listening to this mark who are thinking, I've literally had an idea for one, two, five, ten years, or an intention, or I've had the same conversation about the same thing and I know there's no magic formula, but just speak to us a bit about getting started if you're scared, and a way to you know, not overcome that. But I don't think we ever overcome fear, but we navigate fear. What are your thoughts around that?

how good their ideas are. It really isn't. It's how clever they can be about figuring out quick and cheap and easy ways to try them. And so, in the interest, let me give you an example of what I mean by how to break that model, because the way to do it is to figure out I do not need to do all the things I think. I don't need to raise money, I don't need to build an app, I don't need to hire people. I don't need to

quit my job. All right, here's an example. This is a young woman, she was still in university university students, and she goes, Mark, have this great idea. It's going to be peer to peer clothing rental. Basically, I have a closet full of clothes I never wear. I know all my friends do. It'd be great to build a

bar every one's clothes and we could do. I go, oh, great idea, maybe, and she goes, what's the problem And she goes, well, I need to raise money because I need to build an app and I need to hire someone to help me code this, and blah blah blah. And I go whoa, whoa, whoa, whoa. Let's stop right there. I go, do you have a piece of paper? And she goes, yes, of course, piece of paper. Guys, you do have a sharpie, you know, the magic marker. She goes yeah, And I go, okay, write in the paper.

Want to borrow my clothes? Please knock and I want you to tape that to your dorm room door right now. And we're going to find out in the next twenty four hours. A fundamental piece of your idea, which is does anybody care and if nobody knocks, Well, you've learned something really valuable right there, and you learned it with a piece of paper and a magic marker, and you learned it right now. But let's say someone knocks. That's fantastic.

Then you're going to learn about problems with Well, they're in a different size, or they didn't like anything. Well, then you've learned that. But what if they do and they take things. Now you're going to learn how you feel when your favorite blouse comes back stained or torn. Or you're gonna learn about, oh, I never factor in the cost that everything has got to go to the dry cleaner or or or you're going to begin that process of discovery about whether your idea is a good

one or not. You're going to do that by having collided it with the reality. Now, this is not repeatable, this is not scalable. You can't do everything using three by five cards out of your dorm room. But you sure as hell can do that for the next few months, and then you're gonna know. And then rather than when you're trying to convince someone to join you or a loan you money, it's not going to be imagine if you will, it's gonna be Oh my gosh, I'm going

out of my mind. I'm processing six hundred and thirty rentals every single weekend, and I'm doing it all with three by five cards, And I need to figure out a way to automate this, and I need to figure out a way that's powerful, that's comp And you've learned that your idea is a good one or not. And most likely, though those things I just described, you're going to bump into something you didn't expect, you didn't discover, and then comes the persistence part. You'll go, wow, no

one knocked. Well, what are you going to do about it? Wow? The stuff's coming back stained and you're torn? What am I going to do about it? How am I going to modify this that it might actually work? So when someone is stuck, I'm going if you're stuck because you can't envision, how am I going to build an app? And how am I going to leave my job to

do this? When I have car payments or you're not, You're going to do things quickly and cheaply and easily on the side in your spare time, in a way that if it doesn't work figuratively, what you've lost is a piece of paper and some tape because you've put it in your dorm room and it didn't work, or whatever it takes to try this. And I can give you dozens of examples of every time someone says I had this idea, there's no way for me to validate this idea other than actually doing it, and they go,

you're wrong. There's always a way to validate your idea without actually doing it.

or eleven dollars. And originally I thought, oh, well, this is great. This is an extra hundred dollars a week which essentially improves my wage by twenty percent or something. And then I got another guy, and I had two guys paying hard I'm like, wow, this could this could be a thing and one of my challenge and it just kind of expanded, like it was almost an accidental business.

I just happened to be not bad at training people and not bad at being cheeky and creating, developing rapport and communicating and you know, the two or three skills that I had collided and turned into this thing. But I remember initially mark feeling almost guilty that I was making for me amazing money back then, and I almost no, I didn't almost. I probably still a bit of this

to the day. I felt unworthy and I felt somewhat fraudulent because I thought, well, no, my default setting was I'm worth ten or eleven or twelve dollars an hour. That was my default cognitive default setting for whatever reason. And then when I started to make more money, and then I got busier, and then the next twelve months it went somewhat crazy where I had a waiting list because I was actually managing a gym at the same time. I was twenty three, so I had a fifty hour week,

full time management role managing a gym. Plus I had this side hustle which was becoming bigger than the main job, and it's you know, for my biggest problem was and probably still is. Might not seem like it, but my own bullshit, you know, my own confidence, like constantly fighting that. And I feel like a lot of people have this mark where they they know that they've got potential and ability, but that feeling of being a fraud or not good

enough that's an ever present challenge. Has that ever existed for you?

And then yeah, then you're going, I can't do that. That's not how you did it. You just had one guy on the side and whoa, he's going to pay me this. That gave you the confidence to go, now I can do three guys, and then five, and then pretty soon you're going, Wow, I think there's enough business here that I can quit my day job and do this full time. And that is it does not require this I'm a superman leap it requires I. Wow, it's

actually working. But I agree. I still, you know, I still have those feelings of you know, even though I'll come on to a show like this and I'll go are talking to me, I'm like, I'm like, nobody, come on, I mean, no, I reckon. It's a cognitive dissonance thing, because of course, you know, I can tell myself my own success, and I can tell myself you've won the lottery multiple times, and that's more than just odds, and so I go, I got it. I guess I know something.

Still I don't see myself that way. Just it's a very odd, odd feeling.

all kinds of moments where this almost never worked. And in many ways, the reason that I wanted to write that that one ever worked book was to show people that I am not a superman, that I made a lot of mistakes, there was a whole bunch of times when this almost didn't work, that there was other ingredients that went into making it successful, that it's not all.

It's not one of those books where every chapter is chapter one, look how amazing I am, and number two look with the spectacular decision I did, And number three is look how clever I was? Not the case at all. You know, you got a warts.

is no different. You watch the follower counts go up, and you just want to keep hitting refreshed and you're hitting a little lever and getting a little mouse pellet and it's a it's a hard one.

how much socializing? I don't know what is that? What is that? How does that work for you?

Certainly I love the work. Obviously I in a position I don't need to do it for a living anymore. But the things that motivated me to become an entrepreneur have never gone away, regardless of the economic success I've had from some of them, which is that I love that process of solving problems. I love sitting on the table with smart people, and I still get to do that. I get to do it now more as a mentor. I get to do it now with the podcast and the other ways that I try and pay it forward.

But I try and make sure I limit that to about a third of a week, and I really pay a lot of attention to the ratio between want to do and need to do. Listen, when we have team people who are helping you, you have to do a lot of stuff that you may not be want to do, but you want to make sure you don't lose sight of the things you want to do, and that's in the work environment. So that's a big piece of it.

That's one part. But again I limit it, which is one of the reasons why TIF had to fight so hard to find the time to put us together is because I limit I only do it for two days a week, and I crunch everything into those two days, which means it's hard. Okay. Number two is I'm married.

I been married for a long time. I have three kids, and I vowed a long long time ago that I did not want to be an entrepreneur who is on their sixth company but also on their sixth life, and more importantly recognized in my late twenties that that would not happen if the family and wife were the afterthoughts. That those are the things that I got to after I focused on the business, that I had to make that a big rock in my life, big enough that

everything else fit around it. And that's never stopped happening. And so that whole piece of my wife, my family, my friends, having time for all of them is a big piece of it. So that's another third. But there's a third piece, which is that I'm really passionate about the outdoors about this is a very Australian thing, but just being outside, you know, I surf, I ski, I

mountain bike, I climb, I kayak. Anything that involves being outdoors with the potential chain of hospitalization count me in and Unfortunately, though, I did not pick a hobby like stamp collecting or chess. I picked something that requires frequently getting on three planes in a row to go to some place way up in northern Alaska and then spend ten days kayaking the Schoolerness River. And you cannot fit that in between your eleven o'clock conference call on your

two o'clock meeting. You have to if you want those things to happen, you have to make sure you construct a life carefully to let that happen. So, when I said your earlier question, do I think about how I think? I'm always evaluating that. I evaluate it in every week. I evaluate them every month, I evaluate it in every year, Which is, how do I do if I feel it

getting out of balance? Either getting out of balance because I'm working too much and it's taking away on fine, someone goes, let's go for a mountain bike ride and I can't go. I ask myself, why, how? What am I am? I prioritizing anything incorrectly? Here? Have I structured something in a way that's preventing this from happening? And I have to work that does not come as naturally

to me as the entrepreneurship stuff. But the funny thing, and this is the you know, we talked, We ruminated about success and about how I feel that so many entrepreneurs are motivated by these wrong things. But I've certainly had success from this one perspective which I have had. You know, I've started pariering seven companies, and you know, two of them are multi billion dollar companies, so unbelievably wonderful and lucky. But the thing that I'm proudest of

is not that. The thing I'm proudest of is doing those things while staying married, while growing up with my kids knowing me and liking me, I hope, and having a chance to do the things that make me whole, which is you know, the backcountry skiing and all those things that that success have.

always about that I had had zero interest. Not there's anything wrong with it in being a petrochemical engineer, being a oil field worker or something like that.