SANTA CRUZ, Calif. — Longtime Netflix CEO Reed Hastings is credited with creating a video streaming service that transformed entertainment, but it probably wouldn’t have happened without his friendship with serial entrepreneur Marc Randolph. .
While brainstorming with Hastings in 1997, Randolph designed the DVD-to-mail service that launched Netflix. He then led Netflix as its first CEO before handing over the reins to Hastings in 1999.
Rather than retire and live off his Netflix fortune when he left the company in 2003, Randolph decided to advise start-up startups and their founders. He also worked as a part-time executive at data analytics startup Looker, which Google bought for $2.6 billion in 2019. He also wrote a memoir/advice guide, “It will never work” and hosts a weekly podcast.
Randolph, 64, recently shared his insights with The Associated Press at a cafe near the post office in Santa Cruz, Calif., where he sent the first test disc for Netflix’s DVD service in 1997.
Q: What have you learned advising startups?
A: You expect to help with go-to-market strategy and technology, but a big part of that is marriage counseling. For many of the issues you face as a CEO, you don’t have anyone else to talk to. So if they’re struggling with something, they can’t always go to their team and talk. Often they can’t really speak to the board either, because they don’t want them to know that they’re having trouble or that the board doesn’t really understand the nuances of the issue. And they can’t go to their friends because their friends don’t know the details. There really isn’t anyone else who is impartial and understanding and knows enough of the context. So it ends up being the most rewarding and useful thing. I don’t create businesses; I build CEOs and founders.
Q: What are your thoughts on the current economic uncertainty and its impact on the technology sector?
A: It’s been a remarkable decade for technology, accentuated by the last two or three years, but there are a lot of cyclical things that are going to be corrected. One of them is definitely about tech ratings and expectations. You’ve had this crazy time over the last 18 to 24 months where employees have taken the reins saying: “I don’t like what I see, I may have 50 more jobs tomorrow.” It will correct, and I think it will correct in a positive way.
Q: How did the dot-com breakout in 2000 and 2001 affect Netflix?
A: It was a powerful lesson. We were going to be a (entertainment) portal. If we had gone that route, we would have disappeared because the model was not viable. We were lucky he got fixed when he did. As painful as it was, it imposed this discipline on us where you realize that any service you provide had to cost you less than what you charge. What a concept! Some startups are starting to realize, ‘Holy shit, it’s about cash. All this growth talk, forget it, we need to focus on solving this. Those who don’t will continue to accelerate off a cliff.
Q: What do you think of the kind of technological hyperbole that resulted in Elizabeth Holmes being convicted of fraud?
A: A mistake would be to think it’s a binary thing. There is a point where it borders on outright dishonesty. And even worse, dishonesty where it will hurt people. Is it too far for Tesla to claim increased autonomous driving? Yeah, especially if someone thinks they can just go to sleep in the back seat of a car that’s not self-driving. But for the most part, most people don’t go overboard.
What I don’t want to do is throw the baby out with the bathwater here. Are there extremes? Absolutely. But is it appropriate to talk about the vision of a product before it’s fully ready? Absolutely, at the risk of it sounding like hype. Telling someone “This is what I think it could be” is not the same as saying “I guarantee this is what it will be”. That’s a really interesting question because I have the superpower to speak with tremendous conviction about things that I’m not entirely sure of. And I have to be very careful about that.
Copyright 2022 The Associated Press.