Pod Insights The Ed Mylett Show Founder of NETFLIX: Embrace Your Struggles w/ Marc Randolph About this episode Grow like NETFLIX - The Business MASTERCLASS!
You may not know his name but I can guarantee you’ve used his platform… Marc Randolph is the co-founder and founding CEO of NETFLIX. With over 200 MILLION global subscribers and his company valued at over $250 BILLION, there is no one better to teach you how to GROW and SCALE your business. Marc is a veteran Silicon Valley entrepreneur, advisor, and investor and has completely revolutionized the media industry.
This interview is literally more like a business masterclass that you CAN’T afford to miss! Marc shares his insider tips on business, leadership, and life as an entrepreneur and shares his inspiring journey to finding success beyond his own comprehension.
As an entrepreneur, you’ve inevitably faced rejection and people telling you how crazy your ideas are. And Marc is no different. When he began pitching NETFLIX, everyone said it would never work! Blockbuster even laughed him out of the boardroom!
But in this interview, Marc shares how he turned rejection into a multi-billion dollar comeback, knocking Blockbuster out of the competition and changing the way the entire world experiences media.
And this is not just about storytelling… Marc is giving away ACTIONABLE tips and sustainable strategies you can implement no matter what stage of business you are in.
Marc shares the SECRET to creating a repeatable and scalable business model, how to deal with the “emotional load” of an entrepreneur, and how to find out if your business can be successful WITHOUT raising or borrowing money!
PLUS Marc shares the #1 advantage small businesses have over the big guys AND how to take advantage of it.
Entrepreneurship is a game of inches and we are giving you the cheat code on how to play the game to win… and it's absolutely FREE!
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Ed Mylett? I hear so many small business owners say the exact same thing. They just never have enough time in the day. Well, I measure time differently. I've compressed, condensed, heck, I've bent time. My first day is 6:00 a.m. to noon. My second day starts at noon and goes till 6:00 P.M. And my third day, 6:00 P.M. to midnight. I now get 21 days a week. Stack that up over a month, over a year, over five years, and my life's completely different than it would have been otherwise. And if you want to win as an entrepreneur, you have to compress your time, too. And you definitely can't afford to waste it. Waiting weeks on a big bank for capital? Your best bet's to work with my friends at Cardiff. They know how to compress time for entrepreneurs. They get your business approved in minutes and funded the very same day. They're America's favorite small business lender, and for good reason.
0:45 Ed Mylett? Over 20 years in business, over $12 billion deployed to small business across America. Stop letting bank delays slow down your momentum. Head to cardiff.co/ed. That's cardiff.co/ed. Cardiff.co. Real growth, fast funding. Cardiff. Borrow better.
1:01 Speaker 01 Mr. President, my company, for me, of the explosion on our rig.
1:05 Speaker 02 On October 2nd.
1:06 Speaker 01 Causing massive water displacement and triggering a tsunami. They all heap the blame on me.
1:11 Speaker 02 Tom Cruise is. Digger got us into this mess. And Digger's gonna dig us up. From the director of Birdman and The Revenant.
1:18 Speaker 01 What would happen if I stopped drilling? You stop, you freeze to death, that's what.
1:22 Speaker 02 With great power comes great deniability.
1:25 Speaker 01 I'm not the first nanny.
1:27 Speaker 02 Digger. See the trailer online. Only in theaters October 2nd. Rated R. Under 17. Not a minute without parent.
1:39 Speaker 03 This is The Ed Mylett Show.
1:48 Ed Mylett? So, welcome back to Max Out, everybody. I'm so excited today. We have a guest that founded this little company you've never heard of before. He was the first CEO as well. And we're just real proud of him. He's getting his little business career going. I say that with some humor because this man founded a company called Netflix, which every single one of you is probably a subscriber to by this point. And I want to pick his brain about business, life, leadership. And I can't think of somebody that I'm more excited about talking to. I was telling him off camera. It's gonna be a good show for me. So. Marc Randolph, welcome to the show. Thank you for being here.
2:24 Marc Randolph? Oh, it's a pleasure, Ed. Thanks for having me. And you know, I know I'm sure everyone on this show has heard of Netflix. My real question usually is, how many of you are paying for it?
2:32 Ed Mylett? You know, it's funny you're saying that. My son's away at college, and I was thinking about this last night. Does he have his own Netflix account? Because I hope he does, because you know, there's that it's one of the things about the model still that is really fascinating to me. Where it's not like the DirecTV setup, but you can kind of it goes from house to house with you, correct? Still?
2:50 Marc Randolph? Yeah, from the very beginning, we were pretty lax about it because we did not want to be one of those companies who basically figured out all the possible ways you are going to screw us and we're going to prevent it. We said, listen, everyone's basically honest. Let's make it easy to share. Let's make let's recognize the fact you're going to watch it one day in this TV, the other day on this laptop, a third day on your phone. And all these things we do to try and prevent fraud just end up messing with the people who want to be honest.
3:16 Ed Mylett? Yeah, that's definitely a different business approach for sure. So that's it's not something you heard. I just listened to Dana White going crazy over pirating on the on the UFC pay-per-view too. So I'm curious. So I read a tweet of yours. By the way, you guys, he's a great follow on social media. But you said it was you three and a half years in. I want to make sure I say this right. Three and a half brutal years in. You were so excited to pass 500,000 subscribers, right? Which is a big number. I mean, at the time, you must have thought, wow. Here you go. Nineteen and a half years later, 200 million. Could you have was that ever part of the vision? Did you see this ever happening? I mean, I'm just curious. Does it just even blow your mind to this day?
3:57 Marc Randolph? No, it blows my mind. That would have been I would have been considered hallucinatory if I had been pitching my friends about we're going to have 200 million. We're going to be in every country. There's going to be, you know, Netflix and chill. I mean, these this was all so completely beyond my comprehension. And don't forget, this is an idea that everybody said that'll never work. I mean, my people I pitched, people I tried to get to join the company, you know, my wife said that will never work. So the fact that we not only got it to work, but then after three and a half years. Got to half a million subscribers. That alone was a mind blower, but the fact that we are where we are now, that's just crazy.
4:39 Ed Mylett? By the way, that will never work is his Instagram handle as well, which I love because, and by the way, I love that you just say that because there's a whole bunch of entrepreneurs out there, almost every single one of them, who everyone's telling them that will never work, right? And so I'd love your message about that. I'm curious, I want to ask you some business principle things, but I always look at the other side too, so I'm just fascinated by this. What did Blockbuster not get that you got that made them basically obsolete?
5:06 Marc Randolph? You know, that's an amazing question because everyone wrestles with that and it's not that they didn't get it. Because this and they're smart people, they see where the future is going. They knew that we were on to something. It's a question not of insight, it's a question of courage. And for them to have really been successful, to really have pursued this would have meant basically deprioritizing their existing business model. It would have meant taking their very best engineers, taking them off the business, making them $6 billion a year and put their best people on something that was going to make $5 or $10 million a year. It would have meant compromising relationships with Hollywood, which was the core of their business. It would have meant pissing off their franchisees.
5:51 Marc Randolph? And they just never had the courage to do that. They kept riding it out, hoping somehow miracle upon miracle that they'd pull it off. But customers don't give a shit about that stuff. You've got to do what's right for the customer. You can't be worried first and foremost about your business model or your suppliers or your how you allocate your internal resources for political reasons.
6:13 Ed Mylett? That's so good. And by the way, those of you that are startup entrepreneurs or smaller ones, that flexibility that you have, that maybe some of your bigger competitors don't have, is something that you ought to count in the inventory bank of an advantage of yours of all the disadvantages that you have, your mobility, your flexibility, your ability to pivot, sometimes when you're smaller is much easier to point. I'm just also curious.
6:33 Marc Randolph? We shouldn't underestimate that either because that is what makes this such an amazing business is that you can have these huge companies with huge assets, huge numbers of employees, but they're vulnerable and they shouldn't be. I mean, it should be impossible for two or three women or men in some small garage somewhere to take down a big company. But the big companies are just lumbering and they just don't have that ability to change as quickly as you do. It's what makes it so exciting.
7:03 Ed Mylett? Did they ever have the vision or wisdom to approach you about an acquisition and just get you out of the way and swallow you up? And if they did, did you just have no interest in it?
7:12 Marc Randolph? No, in fact, quite the opposite. You know, right after, right before we hit that 500,000 subscriber mark, this is about two and a half, maybe two years in, we finally had cracked the code and figured out what the business model would be that would work for our business. And it was a subscription model. And as you, you know, the subscription models are wonderful, not as recurring revenue, but they have a terrible downside is you've got to pay all the acquisition cost upfront and then the actual margin leaks in over time. And we nailed it. And all of a sudden, customers were flying in and money was flying out. But that was not a problem until the dot com bubble burst. So I'm giving you the
7:53 Marc Randolph? setup that you have these small team of people, less than 100 of us, who are crushing it. And then all of a sudden, in a matter of months, are going, we're going to go out of business. We are hemorrhaging because we're bringing on customers so fast. We can't raise more money. And that's when we did this thing that a prudent entrepreneur does is we said we're going to sell ourselves. So we reached out to Blockbuster. We finally got the meeting, you know, by two months in, because we were a gnat compared to them. And we flew to Dallas and we went up into this huge, you know, skyscraper with the cavernous conference room with the endangered hardwood conference table, whatever, and pitched. And it was cool because
8:37 Marc Randolph? it was working. You know, we were saying, we'll run this online business. You guys run the stores. We'll find these incredible synergies and we both win. And it was going great. And then they asked that big question, which is how much? And I was there with my co-founder, Reed Hastings, and he had been tapped to make the ask. So he kind of leans in and as confidently as he can goes a $50 million?
9:03 Marc Randolph? And they laughed at us, or pretty close. And it was this tremendously humbling moment. And we were flying back from Dallas back to California. And I remember being crushed because this was going to be that magic, this Deus ex machina, as they, you know, say in the film and book business, where the heroes are against the cliff and it's going to be, and all of a sudden the hand of God plucks them to safety through some miraculous intervention. But not only was the miraculous intervention not going to come, they were going to compete with us. And in some ways, it was this classic entrepreneurial moment.
9:44 Marc Randolph? We recognized that, well, like my dad used to say sometimes, the only way out is through, that we would have to take them down ourselves. And, you know, now that company they could have bought for 50 million is now valued at 250 billion. And the company which had at the time 60,000 employees and 9,000 stores is down to one store.
10:09 Ed Mylett? Oh, my God. That, that right there is one of those things where you go back and rewind this, and I know I'm just talking old school, and you listen to that is one of the most incredible stories of all time, all time, from all different angles. I mean, if you're a small startup entrepreneur and you're like, we, you know, imagine some of these rejections you're getting being hidden blessings. And if you are one of the bigger ones, to be listening to them. And you're speaking about your dad. You're interesting to me. First off, it's obvious you're, you're, you're, you're, your critical thinking skills and your entrepreneurial spirit and this, you guys, Mark's a geology major. Who the heck's a geology major that ends up doing what you've done? But your dad was a nuclear engineer, correct? So your father's a smart man. But I think part of your nature is one of these hidden things that great entrepreneurs do.
10:54 Ed Mylett? You really are into what the client wants. And really, one of the things, if you could explain to everybody, you already sort of had a background where you're doing lots of research about the buying patterns, weren't you? Buying behaviors of your existing clients and potential clients. And ultimately, that helped sort of create the model itself, did it not? I don't have enough entrepreneurs. Think about the client first.
11:15 Marc Randolph? No question about it. I mean, you know, those of you who are actually seeing this can tell that I've been around for a while. And the first half of my career, I was a direct marketing guy. You know, I was a junk mail king. I did catalogs. I did magazine circulation. And all of these things have something in common, which is basically it's selling to someone who you can't see. You're reaching out with either a mailing piece, or a mailed catalog, or television direct response. It's all the same thing. And it's something that I call remote empathy. It's this ability to figure out what somebody wants, or how they're going to react to something you say without seeing them. And this was, you know, 15 years of my career. And my first
11:59 Marc Randolph? three startups were all direct response companies. But I built this kind of discipline of being able to figure these things out, learn how to test, learn how to analytics, learn the subscription business, learn customer service. And that when I saw the internet starting to rise up, and this is in the mid 90s, I immediately said, oh, my God, this is direct marketing on steroids. This is an incredible opportunity to connect directly with customers, to personalize an approach for each customer. And it was the natural precursor to saying, I've got to do e-commerce. And Netflix was just one of, I don't know, 100 different ideas we had to how
12:39 Marc Randolph? to sell something on the internet. But from the very beginning, it was predicated on, I'm going to do something which has an individual connection with every customer. This is not going to ever be one size fits all. And video fit that really nicely, because all of us have different tastes. And Hollywood had sprung up with tons of content designed to match that taste, but there was no one really in the middle connecting people with what they wanted to watch.
13:07 Ed Mylett? Unbelievable. I mean, guys, this is a masterclass.
13:12 Ed Mylett? That we get to visit about some of these things. And I'm I remember reading like some of your business philosophy. One thing you did, I don't, we don't spend time on today, but the one thing is you also knew what you were great at. You knew your strength was more in the startup phase of things and you had enough humility to bring in another CEO or people that could take the company to a different place based on its current circumstances. I don't think enough entrepreneurs are aware of maybe what they don't want to be doing or what their strengths aren't. But one of the other things that I read this blog you wrote, I think you might have wrote it a year ago, but you republished it recently, or at least it came out about the elephant in the room. And when I was coming up in business, I had the good fortune of getting to know Jack Welsh just a little bit. And one of Jack's big principles was candor, being candid with people.
13:54 Ed Mylett? Could you share with everybody the story about when you were let go at your job? And then your philosophy about, you know, discussing the hard things in business and the elephant in the room. This is huge, everybody.
14:06 Marc Randolph? Yeah, you know, it's, people have this false sense of wanting to preserve people's, not hurt somebody's feelings. And you know, what I've kind of learned is that you're never fooling anybody. And worse, when there's an employee who's not working out. And out of perhaps your sense of goodness, you're trying to make it work, or you don't want to hurt their feelings, or you go, this person, it's terrible for two big reasons. One is people aren't stupid and they can see that this person is not performing. And then they, worse, they form the opinion about you.
14:47 Marc Randolph? And they go, either, either Mark is stupid and he cannot tell that this person's a loser. Or even worse, Mark is weak and he's afraid to do something about it. And wow, that has always kind of resonated with me when all of a sudden I realized. How it backfires when you're afraid to take action. And there's so many examples of this. I mean, listen, listen, we've all worked for companies before. And there's this classic thing when someone is not performing and they put them on a, I get, what do you call it, a PIP, a product, a performance improvement plan or something stupid like that.
15:26 Ed Mylett? Right.
15:26 Marc Randolph? Yeah. And I go, that is such cruel and unusual punishment that we're going to do this kabuki theater for six months where I'm going to pretend that you're going to actually get good at your job and you're going to pretend you're going to go through with it. But both of us know you're going to get ultimately fired and all I'm doing is covering my ass. How much better it is to call the person in and say, Ed, it's not working out. You know it. I can know it. We all know this, but it's not because you're a bad person. It's because you're just not a good match for what we need right now. And let me help you find a great job. I'll give you the recommendations. I believe in you. Let's find something that works. God, that's just such a, I mean, listen, the person's going to be shocked. It hurts to lose your job.
16:08 Marc Randolph? I'm not saying it makes it easy, but when you look back on it, everyone feels better about there being honesty behind this whole, this whole approach.
16:16 Ed Mylett? I agree. And just so you know, this was born out of a situation where you lost your job and you basically talked your boss into letting you stay.
16:23 Marc Randolph? Yes, that's right.
16:24 Ed Mylett? They got ridiculous.
16:26 Marc Randolph? Yeah. I said, I heard this stupid story that this is, you know, years and years ago, but I'd heard that it's easier to get a job when you have a job. So I talked him into saying, let me stay for whatever it was, two months or whatever it was, the severance they were going to give me. And it was terrible because I was the walking dead. Everyone knew that I'd been fired, but we were all playing along with this ridiculous play acting. And of course I didn't use the time to get another job.
16:55 Ed Mylett? Yeah. What it does is it erodes your culture. When you don't have candor, when you keep people around that shouldn't be around, at least move their butt to a different seat, it erodes the culture in your company and you just don't perform to, at the level that you could. And you, and business is millimeters. It's inches. These little things are the differentiation between having an exit someday or becoming a world-class company, or even you becoming a millionaire or multimillionaire and not. These little things that we're talking about here. The other one, though, that you speak very eloquently about, I really love the way that you talk about this, is dealing with failure. So, the more and more, as I get older as an entrepreneur, and just observing humans, my son wants to become in one of my companies in the financial industry in sales, and, "Dad, do you think I'd do well?"
17:40 Ed Mylett? Because he's articulate, and patient, and hardworking, and I said, "Max, yes, but here's my concern. Can you really deal with rejection and failure?" Because ultimately, that's what takes people out most of the time. Yet, it's talked about in the 10 things you should do, but to me, it may actually be the most important thing, is your ability to deal, and how you process failure, ultimately. And you speak about like 97.3% of all the tests you run were failures, but talk to everybody about this notion of failure and what it means, and someone like yourself, how you process what most people would call failure?
18:18 Marc Randolph? Yeah, it's funny, because I do a fair amount of work with entrepreneur programs, and I mentor entrepreneurs, and that question gets asked so often, and they put it a different way. They go, "How do I know when to give up? How do you deal with failure?" And it's always kind of been a strange question for me, because I don't resonate with that. I don't really get it, and I've kind of realized, and this is not something that's corny, I don't think about failure as failure. And I've kind of only now realized, in the last handful of years, what's going on, is that I never fall in love with the idea.
19:01 Marc Randolph? I always fall in love with the problem. And when you fall in love with the problem, well, the problem never goes away. The problem never fails. The problem is always there. And then what happens is, all these things which were your ideas, when they fail, who cares? It was just an idea that I was trying, and I've learned something from that idea. That each of these failures is a jumping off point to more exploration. Even when something goes totally wrong, well, at least now, I can cross those three things off the list, and I've narrowed down the possible approaches I have, which actually might work. And for me, that, this is great. That's the fundamental reason that I'm so motivated and excited that I've gotten to spend my entire life as an entrepreneur.
19:46 Marc Randolph? Not because it's worked out economically well for me, not because of any of the other things that go on. It's because every day, it's this adventure of I've got this thing I'm trying to solve and I get to come into work and I get to sit around the table with these smart people and try things. And wow, sometimes some of them really work. Most of the time, they don't. But that's okay. That's what makes it fun. And it's always been this positive spin.
20:15 Ed Mylett? Mark, were you this way before you were successful? Like, this was a philosophy you've carried most of your life?
20:20 Marc Randolph? Oh, absolutely. You know, back, I started as an entrepreneur 40 years ago. And back then, I mean, there were entrepreneurs, but no one called it that, or no one talked about it. And there sure as hell weren't classes, or business majors, or shark tanks about it. You just were a person who was compulsively driven to see something which wasn't working and go, I've got to, there's got to be a way to fix that.
20:45 Ed Mylett? Go to the problem solving thing for a second. I'm just curious, because if that's the thing you love doing, you know, I'm, I used to think, there's a problem, what's the right and the wrong thing to do? And I don't feel that way anymore. Do you have a personal problem solving sort of philosophy that you would share with everybody? If that's so critical, if that's something you love doing, do you have a philosophy regarding that?
21:08 Marc Randolph? Oh, of course I do. And it's one of the things that's taken me a long time to learn. And I've learned that ideas don't count for shit. They, they don't. I hear so many pitches, you know, I do a lot of angel investing, I work with entrepreneurs all over the world. They all want to pitch me their idea and they're fun and you're listening. But the thing is, no idea, zero ideas end up turning into the companies that they become. The successful companies all are this winding path of one thing leads to another, almost never, in fact, never, do things that are successful go, lead directly from the idea they started with. And so what I've learned is that the key thing is You gotta do it, that the more time you spend thinking about it, the more time you're wasting.
21:54 Marc Randolph? That you're trying to envision, can I see around the corner, can I figure it out? And even worse, entrepreneurs get these things stuck in their heads. And they're safe and they're warm and they can build them and they can make them into multinational corporations. And they can imagine all the amazing things when everyone's using this app. Without spending the first moment figuring out how they're gonna actually get the one person to use the app. And here's the trick, the one way is you've just gotta do it. You've gotta say, I'm just gonna start and I'm gonna start completely half-assed. And I know I'm gonna stumble, it's not gonna work. But by taking that first step, I'm gonna start the process of learning what might work. And what I've learned, my process is to break down all pride, to break down all sense that this is gonna happen or work well.
22:39 Marc Randolph? And just friggin do it. And what's taken me a while is to get more and more comfortable with how crappy it can be and still be a learning experience. And I've come to learn that this, in my opinion, is the skill that separates the great entrepreneurs from the mediocre ones. It's not how good their ideas are, but how clever and creative they can be about figuring out ways to try their ideas. Quickly, simply and cheaply. And I do not mean minimal, viable, productable crap, because that is still way too much effort. It's thought experiments, it's simple tests, it's ways of colliding your idea with reality as quickly as you can. Like the classic story, and listen, I'm getting wound up here, so you gotta stop me if you need to.
23:24 Marc Randolph? But the classic story is that when Reed Hastings and I were driving, commuting to work. And we were brainstorming ideas for what I could sell on the internet. And we had a bunch of them, which I could share with you if we have time. But we had this idea for let's, maybe we could do video rental by mail. And then that was a bad idea, but a few months later, we heard about the DVD. And all of a sudden, wow, this could unlock the old idea. Now, we did not go, cool, let's go to the office and write a business plan. We did not go, amazing, let's go put together a pitch deck. We said, let's figure out whether this is ridiculous or not. And we turned the car around in mid commute and drove back down to our town where we lived
24:08 Marc Randolph? and looked for a DVD, because it was a DVD business, and couldn't find one. So we said, let's just buy a used music CD.
24:15 Ed Mylett? Wow.
24:16 Marc Randolph? And we mailed that in a little pink gift envelope to Reed's house in Santa Cruz and found out less than 24 hours later that this idea actually might work. Because the DVD, the CD got to Reed in less than 24 hours for the price of a stamp. But we found that out within 24 hours of having the idea. That is the kind of thinking that I look for in entrepreneurs. That's the kind of way that I pursue.
24:42 Ed Mylett? You know, one of these, you said, I'll unpack something and then ask you about this. That's one thing, there's all this entrepreneur, you've got to have a vision, you've got to have a vision. And I think oftentimes I made this mistake and I was like, I got so committed to my original vision that I was paralyzed and inflexible by it, rather than having the flexibility to evolve, like what you've described here, it's a huge distinction, for sure. And then the second thing I think I'd ask you is, my threshold for looking like an ass is really, you know what I'm saying? I think that's one of the traits, like, I don't mind looking really stupid. And I think too many people, it's not just, the low level message is, don't worry about what people think about you. That's low level. High level is, can you enjoy looking like a fool? Right?
25:26 Ed Mylett? And that's the, would you not agree with that? Because that's ultimately what's going to have to happen for you to take the risks to do all these tests, do this evolution that you've described.
25:35 Marc Randolph? Of course, absolutely. And, you know, it's like, one of my lifelong challenges has been learning foreign languages. And I've concluded, the key is, you've got to be willing to sound like you're an eight-year-old. Because if you don't, if you're constantly just translating in your head, you never make that rapid connection. But startups are exactly the same way. You've got to make a fool of yourself.
25:58 Ed Mylett? How many do you speak?
25:59 Marc Randolph? What's, I'm sorry?
26:00 Ed Mylett? How many do you speak now?
26:01 Marc Randolph? I speak four of them terribly. In other words, I do more for me-
26:05 Ed Mylett? I can tell you that.
26:07 Marc Randolph? Yeah, I do. English is okay. But it's for me, it's more the challenge of learning something rather than is perfecting it. Cause I get bored.
26:14 Ed Mylett? So there's this idea of being able to look like a fool that you talk so eloquently about. And there's this other element that isn't discussed much, and I heard you talk about it that I relate to. Which is that oftentimes trying to do something great. Let's just call it being an entrepreneur, but it could be wanting to be a great athlete. Want to be a great mother. It can be lonely. You know, and I, I wonder if you ever felt that way on your journey? I think there's millions of people, you know, that are going to be listening to this in their car on the treadmill right now. And they're feeling connected and they're getting inspiration and value. And then when this is over, they're back to feeling pretty alone. And I think an acceptance that that's actually an indicator you're on a good journey. Is something that you should all know. Do you agree with that?
26:58 Ed Mylett? Did you ever feel alone and lonely as you were pursuing this? Cause I think that's one of the emotional things you have to deal with as well.
27:04 Marc Randolph? I, I completely agree. And it, it's something that doesn't get taught. And it's something that isn't talked about. And it's such a shame because it is the reality of being an entrepreneur. I mean, people, when they see entrepreneurs portrayed in the media, you know, they're on Shark Tank. It's exciting, or they're pitching, or they're having the launch party when they watched the social network movie, whatever it is. But it's not like that. A lot of it is this overwhelming responsibility. I mean, I remember early at Netflix, you're probably only a year in. And things were not going well. We had this idea that everyone said will never work, turned out to be right. And we were really struggling.
27:44 Marc Randolph? And I remember standing in the stairwell, just looking out at the parking lot and thinking, I'm, I'm responsible for all those car payments. I have to make this work. I have my friends and family have invested. I have to make this work. I have this dream of making this company. I have to make this work. And it's on your shoulders and you think about it all the time. And it's a very, very natural thing. But it's, it's one of the reasons why- They consider a two-person founding team a more stable configuration. Doesn't mean you have to, but it certainly makes it easy. And, and one of the roles that I've kind of played over the last 15 years or so since I left Netflix
28:23 Marc Randolph? was as a mentor, as a person that a CEO of a company could talk to, who did not have an agenda. I wasn't their board, who was their boss. I wasn't their employees, who they had to be careful what they communicated about. I was somebody who understood the problem well enough, who they could talk to about it. And that's a really, really rare thing. And it's something a lot of founders, including myself, have struggled with.
28:49 Ed Mylett? I, I see you being incredible at doing that. Even if we're talking now, I feel some of that for myself and, and, and I'm grateful for it. And, you know, I think one thing entrepreneurs need to know, by the way, people need to know, even if you're going to lead a family. It's one of the things that comes with it is you will probably care, carry what I call the emotional load to a degree, maybe even more than you estimate. There's an emotional load you're going to carry that you need to be equipped for and prepared for, for the moments like you had in the stairwell. You know, for the moments when you get back on that jet coming back from Dallas, for the moments when, you know, inventory runs out or your order gets shipped the wrong way. These are all part of the emotional load regardless of your business model.
29:31 Ed Mylett? When someone quits that you depend on, if you're in the sales business, one of your top producers leave or a client account goes the other way, can you carry the emotional load? And so I hope everybody senses that. And then I ask you, I'm a big believer nowadays, I want a business model that's scalable. How do you know if you're involved in a model that is scalable or repeatable in nature? Cause it seems to me, those are the businesses that win now are people that have a model like that. And how do you, how do you ensure that something can be? Or is that impossible? It's just the product, it's the industry.
30:03 Marc Randolph? In my opinion, it's impossible to know in advance whether it will or won't. And I
30:11 Marc Randolph? Agree with you, it's the objective. That is almost the definition of a startup, which is, you know, a group of people in search of the repeatable, scalable business model. But all these startups, when they start, are certainly not repeatable nor scalable. And here's the punchline from the mouth of Mark, is it shouldn't be. You should not get caught up and have your first experience be repeatable or scalable. Because what that does is force you into building something which is way too complex to test what you're doing. And I have so many examples, I mean, of this. And just going way back in my career, one of my mentors, I was charged with starting a mail letter company.
30:55 Marc Randolph? We had sold a big magazine, we were going to use the money, it's sort of a mail letter company. And I was down setting everything up. And I brought in this mentor and I said, here's what we're doing. And he looked at the budget and he goes, you're spending half a million dollars on the order processing system. And I said, yeah, absolutely, because we can't afford to do by the piece fulfillment companies. That's all of our margin. And he goes, but that's crazy. He goes, you should just do the fulfillment company. And I go, but we'll lose money in every order. He says, doesn't need to be repeatable or scalable. At this point, that's the cheapest way to find out. And it was like a light bulb went off. And from then on, ever since, I'm all about the non-repeatab, non-scalable test, which
31:40 Marc Randolph? gives you the flexibility. And I'll give you a real world example. This is a, and this is the kind of people that I speak to on the podcast, is aspiring entrepreneurs or early stage entrepreneurs. This one woman had a great idea, which was she wanted to do peer-to-peer clothing sharing. You know, I want to, it would be great if my friends could borrow my clothes, I could borrow their clothes, I'll build an app. And I go, whoa, whoa, whoa, whoa, whoa. Do you have a piece of paper? And she goes, yes. Do you have a Sharpie and a piece of tape? I go, she goes, yes. Okay. We're not going to spend six months building the stupid app. I want you to write in the paper. If you'd like to borrow clothes, please knock and tape it to your dorm room. And we're going to find out today whether your idea is any good.
32:25 Marc Randolph? Let's see if anyone knocks. And if they don't knock, well, then you've learned a lot right there. And if they do knock, you're going to begin the next part of your learning. You're going to find out how they feel, how you feel about someone borrowing your clothes. You're going to see how you feel when they come back dirty. You're going to see if those problems would fit and style. And if that works, then you're going to see whether people tell their friends. But it's all going to start tomorrow with something simple. And it's that clever framing. You don't need the app. You don't need the marketing campaign. Start now. Forget the repeatable scalable. I'm sorry I leapt off from that. But once you have it.
33:01 Ed Mylett? Because I want to be, I think we completely agree. But I want to, I want to, I mean, this is brilliant. So what you're saying, for example, if I own a gym and I eventually want to franchise that gym, which, you know, right now in the COVID world is a little bit different. But what a good friend of mine is one of the founders of Ellie Fitness. And so, but what you're suggesting to them is that you've got, the, the repeatable scalable can actually compromise what you're actually doing in the beginning. The idea is to make sure that this works, that it's, that it's viable, that people want it. And then ultimately, your goal is to be repeatable and scalable. If you make that your initial goal, you're going to make missteps. Is that what you're suggesting?
33:36 Marc Randolph? You're correct. You're going to say, I can't do anything unless it's repeatable and scalable. I can't, what do you mean, Mark? You want me to do this matching by hand?
33:44 Ed Mylett? Yeah.
33:44 Marc Randolph? They do everything with pad and paper. What happens when I have a thousand customers? Well, of course it won't work with a thousand customers. But by then, you'll have figured out the real things you need to build. You're going to build the wrong things now. And the other big challenge an entrepreneur has, and I hear it all the time, is I need a technical co-founder, or worse, I need to raise money. And I go, why do you need to, well, I need to build out this whole infrastructure. And I go, if you try and pitch it now, as you probably found out, you're going to be ignored. But if you do this scrappy technique, you do this without the app, without the money, with the piece of paper and the Sharpie, and you do that by yourself for months, and you learn this business that when you then go to raise money.
34:30 Marc Randolph? The pitch is not going to be imagine if you will. The pitch is going to be, look what I've built.
34:35 Ed Mylett? You got it.
34:36 Marc Randolph? People are dying for this, but I am going nuts because I am taking all these clothes down to a dry cleaner myself. And I'm the one who's putting them on the hangers and I'm going out of my mind. That's what I want to build out. And the same thing, when you, an engineer will be excited about seeing real problems to be solved, not imaginary ones.
34:55 Ed Mylett? By the way, that's beautiful. You go, take the example, guys of, think of, go to the extreme. Think of Henry Ford. You know, what if you would have thought in the very beginning, I gotta make this whole Ford thing repeatable and scalable? Like, where are we going to sell these cars? Where are we going to get all the tires from? Who's going to repair these cars? No one knows how to repair it. If you thought through all of these illogical conclusions from the very beginning, business is oftentimes, you, you step into one door and you, and then you step into the next door and you're prepared for the next door and the next door. And Netflix may be one of the greatest examples of all time of that, right? And so it doesn't have to all be the original vision in the future. So I just want to second that. I completely agree with you. I want to ultimately acquire or have a business that's repeatable and scalable.
35:37 Ed Mylett? That other thing too, entrepreneurs, there's this addiction to raising money so prematurely in business now, that either A, you're going to get rejected, or B, you're going to give away way more of your company than you ever should have, because you do it prematurely. So I agree with you totally. All right, a few more things, because this is, I'm just fascinated by you.
35:55 Ed Mylett? What do you think the world looks like 10 years from now? In other words, what kind of an economy will be in? You know, we're already entering a spacious economy. I figure, I feel like COVID sort of sped things up in people's minds about, you know, wow, I can recruit people more than a 25 mile radius away from where our office building is now. But what do you think, if you were to take a peek and be the Nostradamus of the future? What do you think? Are we going to have, you know, autonomous vehicles and, you know, is VR going to be a big deal? Like, what do you see?
36:26 Marc Randolph? So it's, Ed, I'm going to be totally honest. I have the slightest idea. And, and I, I quite frankly, do not spend a lot of time thinking about trying to imagine what the world's going to look like. I do spend a tremendous amount of time ensuring that I and the companies that I work with are on a footing, that they can react to whatever comes. It's a different thing. How do you do that? Well, it used to be, well, you act like a startup. I mean, we talked about Blockbuster earlier and they had these established systems. And that happened so naturally in a company because they, we all start out the same. We have five people doing the work of 50. Everyone does what's needed that day. Everyone does not need to communicate. There are no expense reports.
37:10 Marc Randolph? There is no status reports. Everyone's just scrambling. And then, of course, you get some success and you begin going, we really should have some process. And you begin saying, oh, wow, I can see the next three or four quarters in a row. And you begin bringing in people who are efficiency experts who work on shaving off supply, some supply chain time or increasing margins. And those people are amazing at that. I mean, things like, they can do things I can't even imagine doing. But what they're not good at is reacting and changing their job and changing their process overnight when the conditions change. And what COVID has shown us is that even companies which thought they had nice predictable,
37:51 Marc Randolph? nice scalable business models, not so fast, Mr. Gym Owner, not so fast, Mr. Restaurant Owner, not so fast, Mr. Theater Chain. And the companies who've been able to weather that and survive that are the ones who said, okay, quick, how do we figure out an entirely new world? And a lot of companies learned it the hard way. And so what I'm really doing is making sure that the people that I work with and I can help have set up their culture. Mostly it's a cultural thing to recognize that they have to do things differently, that they're going to have to react quickly, they're going to have to respond. And they put themselves in place that no matter what the world brings, they're ready for it. And we can make short-term predictions, but the more fundamental thing is a cultural shift.
38:36 Marc Randolph? And COVID has been very, very good. It may be bad in a million ways, but very, very good in the fact that it's forced every company to recognize it's going to have to behave like a startup.
38:47 Ed Mylett? Yeah, by the way, and again with your reactions, I'm really glad you kind of answered it that way because I've been getting asked that on about every interview that I do. And I can honestly say that I don't know either. I have some insights as to what won't work going forward, but I'm not completely sure what will work going forward. And, and I appreciate your honesty about that, too. And I want to keep my companies nimble and flexible. You use the term of staying, thinking like a startup. And that's why I wish some of the people on the board of one of my companies I'm involved with could, will listen to this because there's all this legacy thinking, we used to do it this way, we've always done that. And I'm thinking those are death words for most companies right now. I'm curious, you've had this amazing career, but you're, you're, you're evolving every
39:32 Ed Mylett? day. You're one of the most sought after trainers and speakers and inspirers on the planet. That's obvious. Why, listening to you today and seeing you. And you've been a part of birthing one of the most influential companies of the last decade. You've done great work on the environment. You know, you, you're really remarkable man. I'm curious, all the sacrifice, and I'd like you to be completely transparent here. All the sacrifice, all those difficult moments, all the struggle, the financial hardship, the stress that was caused on you. Was it all what's cracked up to be? Being where you are now, was it all what you dreamed it would be? Has it been more, less? Was it all it's cracked up to be?
40:09 Marc Randolph? Oh, it's been fantastic. I'm the, I am the luckiest guy in the world and not maybe for the reasons you think. It is certainly, I'm not lucky because of the success, so to speak, because I define my success as very, very differently. Because what I've always thought, or at least I have since my early 30s, is that if I could figure out what I was good at. And I could spend my life doing that and doing things I really enjoyed doing. That was success. And I was extremely lucky that I fell into both of those things pretty early in my life. And I, this entrepreneurship thing is something that I love doing.
40:53 Marc Randolph? I love coming to work. It is not a job to me. And here's the modest part, I guess, I'm pretty good at it. I've got a pretty good sense of early-stage problems, of the triage, of the focus, of the leadership that is required there. But I get to do it. And to have spent my whole life doing that has been incredibly rewarding and worth every bit of the stress and, and heartache that it comes to. And what's amazing is that, you know, I, I left Netflix more than 15 years ago. And I did somewhat personally painfully because I loved that company. I mean, that was my baby.
41:37 Marc Randolph? But it had changed and not in a bad way. It had grown up. It now had big company problems. And these were not the problems that I was particularly good at solving. And I realized that even though I loved the company, I didn't necessarily love the things I was doing every day. And that if I was truly successful, I, I should be doing the things that I'm good at and that I love. And that meant leaving Netflix to get back to the early-stage stuff. And, and now I, I do, I get that. I don't, I mean, I, we sold the last, I started a company after Netflix, which we sold, wow, about a year and a half ago. Time flies. But, uh, you know, I get to spend my time now working with other early-stage companies,
42:21 Marc Randolph? mentoring early-stage entrepreneurs. I mean, it's the, it's what the podcast is about. It is me on the phone or on Zoom. With entrepreneurs doing the sort of things you and I talked about today, giving them the kind of advice that I gave to the young woman who wanted to do the clothing company, doing the advice about the scaling and talking about loneliness and talking about all the problems that people who are trying to turn their ideas and their dreams into realities face. And believe me, to get to do that every day, I'm an incredibly lucky guy.
42:57 Ed Mylett? Yeah, you're incredibly gifted at doing it as well. There are great entrepreneurs who aren't so great at teaching it or articulating it. And the combination of the two is a rare set of skills that you have. And it's why I wanted you here today.
43:11 Marc Randolph? Yeah, a shared mission, Ed. I think that's why I was so eager to come on with you. I know that you feel that same way is that kind of what is our obligation is to take all these things. We have learned that these things are not impossible, that you don't need to be a Superman to do it. It's just that it's starting and it's having the self-confidence and it's recognizing it's not always easy. And I'm so appreciative to have people like yourself and the other people out there who are trying to inspire people to get going.
43:39 Ed Mylett? Thank you. And I like that there's, I like to listen to people who have some track record when they're teaching me. In other words, when I go to the gym, I'd like to be trained by somebody who is fit. If I'm going to be coached by an entrepreneur, I'd like it to be somebody who can successfully use clues. And one of the things that this space, so to speak, I think, needs a little bit more of is actual functioning entrepreneurs who have actually done something rather than teaching somebody things maybe they've not applied in their life. And you can feel the difference, you know, candidly, you can feel the difference when someone who's done something, who's rooted in their philosophies, even if two people even disagree subtly on something,
44:19 Ed Mylett? that there's a level of influence and certainty that having done something only gives you through real experience. And obviously, you've had multiple incredible experiences. Great, last question. By the way, thank you in advance because this is 45 or 50 minutes that just literally flew by. And we could go two hours, which means probably I'm going to bring you back if you're willing to do that.
44:40 Marc Randolph? Happy to.
44:41 Ed Mylett? Before we end, because always at the end we do this, make sure you follow Mark on social media. And we'll put his, uh, his, uh, tagline up there on the, on the YouTube if you're watching it. And obviously that will never work is the one on Instagram. Is that the same on Twitter or is it your name on Twitter?
44:55 Marc Randolph? It's, it's MB Randolph on Twitter and the podcast is also called That Will Never Work.
44:59 Ed Mylett? Guys, you're gonna, you're gonna want to check that podcast out. Last thing I want to ask you, and this is just a generic question. I'm an entrepreneur out here. I'm listening today. I'm hurting. Covid got me a little bit. Um, I'm scared. I'm scared. I'm at, I'm at that point. Maybe you were on the flight back, but probably not even that far along. I might be the dude in the stairwell and I only got two people there. I left the job that my family thought I shouldn't have left. The 401ks dwindled. My spouse is not real happy with where I'm at right now. And I run into you at Starbucks and I go, oh my gosh, Mark, is there any words of wisdom you might give me? What would you say to that person who's feeling those things right now?
45:43 Marc Randolph? I'd tell him two things. I go, I've been where you've been. I know how painful this is and the struggle. And so sometimes it appears that this mountain in front of you is unclimbable. But in all sincerity, when I look back at the times that I thought were the best, it tends to be the times and it was the hardest. And I'm sincere about that. Most of my great memories are banding together with other people and saying, oh my gosh, we are in deep how am I gonna, how are we gonna dig out? That, that's what I remember as being the best parts of Netflix, the best parts of Looker, the best parts of the other companies I've done.
46:25 Marc Randolph? And then the second thing I'd say is that when everyone tells you that will never work, the reality is that most of the time they're going to be right, but not always. And that I can speak from personal experience that sometimes it actually does work.
46:42 Ed Mylett? I can second that. And I think that's incredible. I very rarely, brother, I'm doing one of these interviews, I just sit back and kind of back in the to be honest with you, like, there's just so much truth there. And as somebody who's walked, you know, somewhat similar journey, I guess, to some extent, I just really respect you.
47:02 Ed Mylett? And and I'm grateful for
47:03 Marc Randolph? Thank you.
47:04 Ed Mylett? For being willing to share yourself with my precious community here. And this was one of those shows, brother, that this made a difference in people's lives today. So I just want to acknowledge you for doing that today, and just for being who you are. So thank you so much, Mark, for being here today.
47:22 Marc Randolph? Real pleasure being on with you, Ed. And thanks again for not just the opportunity to speak to you with you, but also for all the stuff you do.
47:28 Ed Mylett? Thank you, brother. Everybody, I know this made a difference for you. Just please share the show, share this with people that need to hear it. And I just want to thank all of you for listening. I don't thank all of you enough. And for all of your support allows me to bring you world class, like on the spinning earth, most unique and special people, just like I did with Mark today. So thank all of you. God bless you. Max out.
47:55 Speaker 03 This is the Ed Mylett Show.
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