#496: Marc Randolph on Building Netflix, Battling Blockbuster, Negotiating with Amazon/Bezos, and Scraping the Barnacles Off the Hull

Marc Randolph on Building Netflix, Battling Blockbuster, Negotiating with Amazon/Bezos, and Scraping the Barnacles Off the Hull | Brought to you by Wealthfront http://wealthfront.com/tim automated investing, Helix Sleep http://helixsleep.com/tim premium mattresses, and Athletic Greens https://www.athleticgreens.com/tim all-in-one nutritional supplement. More on all three below. Although best known as the co-founder and first CEO of Netflix https://www.netflix.com/, Marc Randolph‘s (@mbrandolph https://twitter.com/mbrandolph) career as an entrepreneur spans more than four decades. He’s founded or co-founded half a dozen other successful start-ups, including, most recently, Looker Data Sciences https://looker.com/, which he sold to Google in 2019 for $2.6B. He is currently mentoring a handful of other early-stage companies and advising hundreds of other entrepreneurs. He is also an active seed investor in startups all over the world, author of an internationally bestselling memoir https://www.amazon.com/That-Will-Never-Work-Netflix/dp/1913068064?tag=offsitoftimfe-20, and host of the new podcast That Will Never Work https://podcasts.apple.com/us/podcast/that-will-never-work/id1550777106, where he dispenses advice, encouragement, and tough love to struggling entrepreneurs. When not surfing, mountain biking, or back-country skiing, Marc is a frequent speaker at industry events, works extensively with young entrepreneur programs, sits on the board of the environmental advocacy group 1% for the Planet https://www.onepercentfortheplanet.org/, and chairs the National Outdoor Leadership School https://www.nols.edu/en/‘s board of trustees. Please enjoy! * This episode is brought to you by Helix Sleep http://helixsleep.com/tim! Helix was selected as the #1 best overall mattress of 2020 by GQ magazine, Wired, Apartment Therapy, and many others. With Helix http://helixsleep.com/tim, there’s a specific mattress to meet each and every body’s unique comfort needs. Just take their quiz—only two minutes to complete http://helixsleep.com/tim—that matches your body type and sleep preferences to the perfect mattress for you. They have a 10-year warranty, and you get to try it out for a hundred nights, risk free. They’ll even pick it up from you if you don’t love it. And now, to my dear listeners, Helix is offering up to 200 dollars off all mattress orders plus two free pillows at HelixSleep.com/Tim http://helixsleep.com/tim. * This episode is also brought to you by Athletic Greens https://www.athleticgreens.com/tim. I get asked all the time, “If you could only use one supplement, what would it be?” My answer is usually Athletic Greens https://www.athleticgreens.com/tim, my all-in-one nutritional insurance. I recommended it in The 4-Hour Body in 2010 and did not get paid to do so. I do my best with nutrient-dense meals, of course, but AG https://www.athleticgreens.com/tim further covers my bases with vitamins, minerals, and whole-food-sourced micronutrients that support gut health and the immune system. Right now, Athletic Greens https://www.athleticgreens.com/tim is offering you their Vitamin D Liquid Formula free with your first subscription purchase—a vital nutrient for a strong immune system and strong bones. Visit AthleticGreens.com/Tim https://www.athleticgreens.com/tim to claim this special offer today and receive the free Vitamin D Liquid Formula (and five free travel packs) with your first subscription purchase! That’s up to a one-year supply of Vitamin D as added value when you try their delicious and comprehensive all-in-one daily greens product. * This episode is also brought to you by Wealthfront http://wealthfront.com/Tim! Wealthfront http://wealthfront.com/Tim pioneered the automated investing movement, sometimes referred to as ‘robo-advising,’ and they currently oversee $20 billion of assets for their clients. It takes about three minutes to sign up, and then Wealthfront will build you a globally diversified portfolio of ETFs based on your risk appetite http://wealthfront.com/Tim and manage it for you at an incredibly low cost. Smart investing should not feel like a rollercoaster ride. Let the professionals do the work for you. Go to Wealthfront.com/Tim http://wealthfront.com/Tim and open a Wealthfront account today, and you’ll get your first $5,000 managed for free, for life http://wealthfront.com/Tim. Wealthfront http://wealthfront.com/Tim will automate your investments for the long term. 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• 0:00Tim Ferriss?

  This episode is brought to you by Athletic Greens. I get asked all the time what I would take if I could only take one supplement. The answer is invariably Athletic Greens. I view it as all in one nutritional insurance. I recommended it, in fact, in The Four Hour Body. This is more than 10 years ago, and I did not get paid to do so. With approximately 75 vitamins, minerals, and whole food sourced ingredients, you'd be very hard pressed to find a more nutrient dense and comprehensive formula on the market. It has multivitamins, multimineral, greens complex, probiotics and prebiotics for gut health, an immunity formula, digestive enzymes, adaptogens, and much more. I usually take it once or twice a day just to make sure I've covered my bases if I miss anything I'm not aware of.

• 0:43Tim Ferriss?

  Of course, I focus on nutrient dense meals to begin with. That's the basis. But Athletic Greens makes it easy to get a lot of nutrition when whole foods aren't readily available. From travel packets, I always have them in my bag when I'm zipping around. Right now Athletic Greens is giving my audience a special offer on top of their all in one formula, which is a free vitamin D supplement and five free travel packs with your first subscription purchase. Many of us are deficient in vitamin D. I've found that true for myself, which is usually produced in our bodies from sun exposure. So adding a vitamin D supplement to your daily routine is a great option for additional immune support. Support your immunity, gut health, and energy by visiting athleticgreens.com/tim.

• 1:27Tim Ferriss?

  You'll receive up to a year's supply of vitamin D and five free travel packs with your subscription. Again, that's athleticgreens.com/tim.

• 1:40Tim Ferriss?

  This podcast episode is brought to you by Helix Sleep. Sleep is super important to me. In the last few years, I've come to conclude it is the end all be all, that all good things, good mood, good performance, good everything seem to stem from good sleep. So I've tried a lot to optimize it. I've tried pills and potions, all sorts of different mattresses, you name it. And for the last few years, I've been sleeping on a Helix Midnight Luxe mattress. I also have one in the guest bedroom and feedback. From friends has always been fantastic. It's something that they comment on. Helix Sleep has a quiz, takes about two minutes to complete, that matches your body type and sleep preferences to the perfect mattress for you. With Helix, there's a specific mattress for each and every body.

• 2:25Tim Ferriss?

  That is your body, also your taste. So let's say you sleep on your side in like a super soft bed. No problem. Or if you're a back sleeper who likes a mattress that's as firm as a rock, they've got a mattress for you too. Helix was selected as the number one best overall mattress pick of 2020 by GQ Magazine, Wired, Apartment Therapy, and many others. Just go to helixsleep.com/tim, take their two-minute sleep quiz, and they'll match you to a customized mattress that will give you the best sleep of your life. They have a 10-year warranty and you get to try it out for 100 nights, risk-free. They'll even pick it up from you if you don't love it. And now, my dear listeners, Helix is offering up to $200 off of all mattress orders and two free pillows at helixsleep.com/tim.

• 3:09Tim Ferriss?

  These are not cheap pillows either, so getting two for free is an upgraded deal. So that's up to $200 off and two free pillows at helixsleep.com/tim. That's H E L I X, sleep.com/tim for up to $200 off. So, check it out one more time. Helix, H E L I X, sleep.com/tim.

• 3:36Tim Ferriss?

  At this altitude, I can run flat out for a half mile before my hands start shaking. Can I ask you a personal question?

• 3:43Speaker 01

  No, we're just sitting in a proper time.

• 3:46Speaker 02

  I'm a cybernetic organism, living tissue over metal endoskeleton.

• 3:59Tim Ferriss?

  Hello, boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of The Tim Ferriss Show, where it is my job to interview and attempt to deconstruct world-class performers from all different avenues, all different areas of life, whether it be business, military, sports, or otherwise. Now, today, we have a very special guest. Although he is best known as the co-founder and first CEO of Netflix, Mark Randolph's story has a lot more to it. His career as an entrepreneur spans more than four decades. He's founded or co-founded half a dozen other successful startups, including most recently Looker Data Sciences, which he sold to Google in 2019 for 2.6 billion. That's with a B billion dollars. He is currently mentoring a handful of other early-stage companies and advising hundreds of other entrepreneurs. He is also an active seed investor

• 4:42Tim Ferriss?

  in startups all over the world, author of an international bestselling memoir, and host of the brand-new podcast, one of my favorite titles for a podcast I've seen in a long time, That Will Never Work. And we're going to talk about why that has some relevance to a lot of his story. In that podcast, he dispenses advice, encouragement, and tough love to struggling entrepreneurs. When not surfing, mountain biking, or backcountry skiing, Mark is a frequent speaker at industry events, works extensively with young entrepreneur programs, sits on the board of the Environmental Advocacy Group, number one for the planet. I'm laughing, folks, because I just retook that about 17 times, and shares the National Outdoor Leadership School's Board of Trustees. You can find him everywhere, on Instagram, @ThatWillNeverWork,

• 5:24Tim Ferriss?

  Twitter, @MBRandolph with a P H, Facebook, @MarkBRandolph, LinkedIn, Mark Randolph, and website, where I'm sure you can find everything, markrandolph.com. Mark, welcome to the show.

• 5:37Speaker 01

  Well, thanks, Tim. That was quite a mouthful. And I struggle with advocacy group as well, too. So don't worry about that.

• 5:44Tim Ferriss?

  Too many consonants and vowels. I want to start, perhaps, in the midstream of your chronology of sorts, a little in the earlier chapters, and that is at 21 years old. So you were kind enough to send some notes to me, but they're sufficiently cryptically written that I don't know any of the story, which is perfect. And that's what I like. So this alludes to surviving on the streets of Hartford, Connecticut for three days without money, watch, wallet, food, etc. Could you please tell me this story?

• 6:18Speaker 01

  Yeah, it's an experience that probably you wouldn't find happening today. It kind of begins verging on something almost illegal. But I was working at the time for a program which took young people from urban backgrounds, sometimes adjudicated youth as they call them, and we used to call it hoods in the woods, but took them out into the backcountry to try and really stress them a little bit and help them learn about themselves. And it was a pretty powerful experience for them. And as the training for us, they wanted us to have an experience where we felt similarly disoriented, so that we could understand what they were going through. And of course, all of us were pretty comfortable campers, hikers, backpackers, so they had to find something a little different.

• 7:02Speaker 01

  And the experiment they came up with involved taking us to an urban area, and for me it was Hartford, Connecticut, taking away our watch and our wallet and our ID, and dropping us off on a sidewalk at about 10:30 in the morning and saying, "We'll be back for you in three days." And they had us write a emergency phone number on our arm with a Sharpie, just in case. And we were on our own. Dog tags, but cheaper. Exactly. But listen, I was probably more likely to chew my arm off than I was to call that phone number. I was gonna make it through this thing. And you know, it was pretty, pretty fun for a while. And then, of course, you know, being a 21-year-old, you begin getting hungry. So your first chore is to find food.

• 7:45Speaker 01

  And my first tactic was, it's a little embarrassing even to say this, but I would go to the food court and I would hover until I saw someone get up from their plate and walk away with food still on it. And then like a seagull, I would swoop in and finish the food on their plate. But that worked. And then I began saying, "Listen, I should maybe cut out the middleman. I wonder if I can get some money and I can buy my own food." And I came up with the idea that I would panhandle for it. And I thought to myself, "Well, how hard could that be?" And the answer is really hard. I don't know, Tim, whether you've ever had to walk up to a stranger and put your hand out and ask for spare change, but there is something

• 8:26Speaker 01

  deep in us, in our pride, that makes that really, really hard. And I tried for hours before I get the courage to even make my first ask. And of course, the person just looks down and walks past you and you just feel like nothing. But little by little, you kind of begin to hone the ask. You know, what do you say? How do you approach someone? What kind of person do you think is more likely to give you money? And after a handful of hours, I kind of had gotten the hang of it. And the interesting thing, what worked for me was complete sincerity. At the beginning, I was trying, you know, bullshit. I was, you know, I've lost my wallet. I had it taken from me. I was, and after a while, I would

• 9:11Speaker 01

  just look people up, walk up to people and say, can you spare some change? I am really hungry. And they could see it in my eyes and see it in my face. And that ended up being the most effective thing. And I have never, ever forgot that experience of begging for spare change on the streets of Hartford, Connecticut, because as an entrepreneur, it's part of the job description that you're always asking for money. And I just have to say that when you have begged for spare change on the sidewalk, that asking a VC for $50,000 is nothing.

• 9:44Tim Ferriss?

  That is a great story, number one. Number two, if you're ever a professional wrestler or MMA fighter, I think Mark the Seagull Randolph is a great option for you. And even as early as the Panhandling Experiment days, you were already split testing. And I think we're going to come back to that. But I want to first go to the Wilderness Experiences or those types of experiences that you alluded to. Was that organization, the National Outdoor Leadership School, or was that a different organization at the time?

• 10:22Speaker 01

  Yeah, that was a different organization. During my summers, all through late high school and certainly all through college, I would spend three months a year. Basically, leading, either going on or later, leading these backcountry expeditions. And two months of the year, I would do them for this school called the National Outdoor Leadership School. And then, one month a year, I would do it for an organization called the Wilderness School. And that was the one that was actually not done in the Rockies like Knolls was, but it was done in, down the east coast, in the Berkshires and the Catskills. And that was the program that was for the adjudicated youth, where I had to do the Hartford Urban Immersion Program.

• 11:03Tim Ferriss?

  What did you take from Knolls? And maybe you could elaborate a bit on that experience, the National Outdoor Leadership School. What did that provide you?

• 11:14Speaker 01

  I mean, just to jump to the punchline, pretty much, that taught me almost everything I know about leadership. It's in a very, it was a very special way of learning leadership. And just for some quick background, for those who have never heard of Knolls, it's a leadership school, but it uses the wilderness as that classroom. And the format, although course lengths are different, are pretty basic, was they take a handful of people, they bus you to a trailhead, they drop you off, and off you go, and you're out in the mountains for 30 days. And there's no contact, you're not coming back into town, you're a self-contained group. And then you get picked up after 30 days, and the course is done.

• 11:55Speaker 01

  But the learning methodology here is, each day, they break the group, which might have 12, 16 students, into small groups, three or four. And they appoint a leader of the day. And the leader of the day has responsibility for that group. What time they're going to leave in the morning, what the route is going to be, when they're going to stop for lunch, how long the rest breaks are going to be, whether they stop when someone's complaining about a blister, or say, "Let's push on." And trailing behind you, of course, is one of the instructors, one of the, you know, leaders of the whole group. But they're not saying anything, they're just watching and trying to make sure you don't end up being eaten by a bear or falling in a river. But I started doing that as a student when I was 14 years old.

• 12:38Speaker 01

  And this was this opportunity to have real leadership responsibility, to make real decisions with real consequences. But the most incredible part was, you found out. Hours later, the results of your decision making. You found out what happens if you don't leave until 10:30 or 11:00 in the morning. You found out what happens if you let the break linger for an hour and a half for lunch. You find out what happens if you take the wrong trail. And you begin learning even more subtle things. You learn how to communicate with your group, how to communicate with confidence and clarity decisions about things that you're really not that confident or clear about. When you need to ask your group for input and when you don't.

• 13:22Speaker 01

  And I was learning that when I was 14. And each time you do that, you're given a bit more responsibility. And I ended up coming back and being an instructor for the school. So all of a sudden, I had higher level of leadership. And eventually, I was a course leader, where I was in charge of the entire group for the 30 days. And so for me, by the time I actually entered the workforce, became an entrepreneur with real stakes, I had been doing those things already for years. And it was this chance to learn leadership by doing it, not by studying it, not by talking about it, but by actually doing it. And that ended up being the most incredible preparation for the career that I ended up choosing.

• 14:07Tim Ferriss?

  Several follow-ups here, because I'm fantasizing about John Rambo, First Blood, developing my skills, not just communication, but practical wilderness skills. That's partially tongue-in-cheek, but not entirely. Does the National Outdoor Leadership School offer programs or extended programs, so not just a long weekend, but a week or two for adults? I remember when I was working on one of my books, looking at different schools, like BOSS, the Boulder Outdoor Survival School, and I'm sure Knowles, if it has an adult program. If for for an adult who would want to experience something like this, are there options that you're aware of?

• 14:49Speaker 01

  Absolutely. Because you can learn leadership at any age. And certainly, the format is slightly different. But there's courses which are, for example, as short as three days. There's courses that are as long as an entire year. There's semesters. I mean, the one I described is kind of the core offering, which is one month. But of course, it's unreasonable to expect a an adult who has a job and a life to detach for an entire month. So, yes, there's great programs for adults. And they're given not just in the United States, but all over the world with varying degrees of difficulty, depending upon what your physical appetite is for for that type of thing.

• 15:28Tim Ferriss?

  Let me ask you about communication. Because you mentioned communication and how much that changed your communication with groups about decisions, say, throughout this entire process. And it makes me think of Warren Buffett, who will often say that his best investment was in a Dale Carnegie course on public speaking. Because it just it puts everything else that you do on steroids, if it's done well. How did your communication change over time when communicating these decisions? In other words, if you were to look at the before shot, you have some audio of your first, maybe kind of awkward, attempts at communicating, and then you flash forward a few years and look at the after. Could you give us an example or describe how those would be most different?

• 16:12Speaker 01

  Yes, certainly. You're actually very astute to pick up that leadership is a hugely communications-driven thing. And people are looking to you to, as I said, you know, communicate with some confidence and clarity where we're going. And there's lots of ways to do that. And one of the things that experience teaches you, one of the things that Knowles teaches you, is that we all have different leadership styles. And you have to find a leadership style that works for you. I mean, some leaders work much better by leading from the front. So when they're communicating, it's really, here is what we're going to do. But other leaders are much more collaborative. They're one of those leaders where it's never quite clear who's making the decision because

• 16:57Speaker 01

  they're so good at soliciting opinion and having it come out as a group opinion. It's also leadership is highly situational. If we're just going for a hike, I'm more than happy to sit and let's talk about where we're going and what do you think and how's everyone feeling today? But listen, when the shit hits the fan, when things are really nasty, when you're high in a peak, when the weather's coming in, there is no time for that. In that case, you have to shift and realize now, I have to basically say, do this now. And have people recognize in my voice, the urgency of this, that there is not time to challenge this, there's not time to question this. If we don't go now, someone's going to get hurt. I've spent pretty much my entire life continuing to work on communication skill.

• 17:42Speaker 01

  You know, when I look back at, at college, the two most valuable classes that I took was a writing class and a public speaking class. And I use both of those skills almost every single day. And I've also kind of realized that you never end, or never finish getting better at them. You know, writing a book, wow, that required all kinds of understanding of how much more complex this was than I ever imagined and all the things that I had to learn. And as I began getting into public speaking six or seven years ago, where I had to do this, not in front of five or 10 people, but in front of five or 10,000 people, it just steps it up incredibly. But that's what's fun. I mean, learning a craft, that's, that's the best.

• 18:27Tim Ferriss?

  So let's, let's hone in on what appears to be one of your superpowers and certainly craft, and that is split testing, iterating. We, we talked about the panhandling and as, as also an aspiring busker. So not only do I want to be John Rambo, but also busker at some point who like drums on the sidewalk for, for money anonymously, pseudonymously at some point, but.

• 18:51Speaker 01

  I see a reality show.

• 18:55Tim Ferriss?

  The masked busker.

• 18:57Speaker 01

  Oh, my God, is that that's Tim? Is that Tim Ferriss drumming?

• 19:01Tim Ferriss?

  Just if I'm if I'm if I'm looking for other ways I can self immolate publicly, I will

• 19:07Tim Ferriss?

  definitely jump on more reality television. But when did you first cut your teeth? Or how did you most effectively cut your teeth professionally? And you can take that in any way that you like with with split testing and iterating. And maybe you could explain what that even means for people who may not know the term.

• 19:26Speaker 01

  Sure. And this goes way back. I mean, to the very roots of entrepreneurship. You know, I guess probably the first thing I did was I was a I did candy arbitrage, you know, where basically you recognize, wow, I can buy a bag of candy for a dollar with 20 pieces in it. And I can sell each of them for a dollar at school. And when you realize that there's this opportunity, and you jump in. And that's what I did when I was probably in fourth or fifth grade. And but the iteration comes from, what can I get away with? I mean, at first, you buy it for 10 cents and sell it for 20. And you go, that was easy. Maybe I can sell it for $2. And of course, it doesn't go so well. But little by little, as you keep

• 20:10Speaker 01

  trying different things, you hone in on the one that actually has the best return for you. I also sold American seeds, which is probably the closest thing that America had to indentured servitude back in the 60s when I did it, where basically, you went door to door selling seed packets. And if you sold 7000 or 8000 seed packets, you could win a 15 cent whistle or something like that. But nevertheless, I was into it because I'd go up to the door, and I'd pitch it. And it wouldn't work. And then I'd have to try at the next door. And little by little, again, you're trying different things. And what happens if I say, I've put together a combo pack, or if you buy three, I'll throw in a fourth for free. And each trying all those little things to find out which ones

• 20:55Speaker 01

  work best, which ones work best for you, which one works best for the product you're trying to sell. And, you know, we can jump into this. This is a big piece of my life. You know, before I really became a tech entrepreneur, I was a direct marketing guy. You know, junk mail, direct response television, catalogs, mail order, magazine circulation. And that is entirely about testing things, trying different things and seeing which ones work, which ones don't. And for ones that work, what works better?

• 21:27Tim Ferriss?

  So I'll share something that I don't think I've ever shared publicly before. One, people may have heard, which is I, in college, applied to a few different jobs. One was Trilogy Software, which I was very excited about, didn't get the job ultimately. The other one that I was excited about, which I also did not make the final cut for, was working at Capital One. Capital One, for people listening, you might recognize that associated with credit cards. At the time, they were one of the most sophisticated direct mail outfits. They were extremely analytical and very, very good at split testing. And I, as someone as a kid who had terrible insomnia and watched lots of infomercials,

• 22:10Tim Ferriss?

  was fascinated by all of this iteration and the idea that you could, over time, determine exactly what worked and exactly what didn't. Could you speak to, I suppose, a credo, a quote of yours that is a sharp contrast with "there are no bad ideas"? It is, "There's no such thing as a good idea." Could you speak to that and also maybe give us examples of some ideas that started off really bad in your life?

• 22:42Speaker 01

  I'm not even sure where to start with this. Such an overwhelming collection of bad ideas. I've, over time, I've migrated and I've moved from thinking, "Oh, you know, there's no such thing as a bad idea," into, "Well, there are some bad ideas." And now I am firmly convinced there's no such thing as a good idea. Every idea is a bad idea. No idea performs the way you expect once you collide it with reality. And the more I learn, the more I believe that it's true. And what that has forced me to do is say, "I've got to stop thinking about things and I've got to just begin doing them because that's the only way I'm going to figure out

• 23:25Speaker 01

  whether it's a good idea or a bad idea." And that's hard for us. It's hard for people because people don't like to fail. Uh, they want their experiments to work. And so they do this terrible thing where you keep it in your head. Where it's safe and where it's warm and where you can embellish it. And it's a great idea as long as it's all imaginary. And in the safety of your head, it can, you know, grow and you can add on divisions and you can pivot it in the new areas. And you've built this huge castle in your mind. And then of course, if you ever decide to do it, of course, it's way too big and too complicated to do. So it's all about taking these bad ideas and colliding with the reality as quickly as possible.

• 24:08Speaker 01

  And I will give you the classic, classic idea. And this is actually the Netflix beginning. Uh, and it came from when my Netflix co-founder, a gentleman named Reed Hastings and I, you know, we're both out of work trying to figure out what do we do next? And I, I knew at that point that I was going to start another company. And Reed was going to go back to school, but he was going to fund this startup we were going to do. We had to find the idea together. And there's a bunch of crazy ideas, which I probably should go into with you just to give you. Actually, I'm going to take a second and do it if that's okay. I want to tell you some of the crazy ideas that actually might have been Netflix. Because they're examples of bad idea, good idea, who knows?

• 24:51Speaker 01

  So one of them was personalized shampoo. Where, and I had this great idea and I pitched Reed that, okay, here's how it goes Reed. You're going to cut off a lock of your hair, you're going to mail it to us. And then our team of ace hair scientists is going to formulate a custom blend just for you. And then you're going to subscribe to it. And then Reed thought that was pretty stupid. So that didn't go any further. So then the next day in the car, I was carpooling to work with him. I go, okay, here's the next one. Custom dog food. We're going to formulate a custom blend just for your pet. For its breed and its gender and its activity level or its climate or whatever. And he didn't like that either. And then the other one was video rental by mail.

• 25:36Speaker 01

  That wasn't quite as bad because video rental was a $6 billion category. But the problem was, this is 1997, video rental was on VHS cassette. You may remember was big and awkward and expensive. And we bagged that one. And now here's the thing I was talking about, about good ideas, bad ideas. We one day heard about this technology called a DVD. And we were in the car talking about DVDs and it's small and it's light and it's thin. And then the idea popped in our head that maybe we could mail DVDs to people, that this might dust off that old video rental by mail idea. But rather than saying, what a good idea, let's do some research, rather

• 26:20Speaker 01

  than rushing to the office and working on a business plan, rather than, you know, putting together a pitch deck, we just turned the car around mid commute and drove back down to the town we lived and tried to buy a DVD. And of course, there weren't any, it was in test market. So we bought a used music CD and mailed that to Reed's house in Santa Cruz for the price of a postage stamp. And the next morning, we learned, is it a good idea or a bad idea? Because he had gotten this CD that had got to his house in less than 24 hours for the price of a postage stamp. And that was a way of knowing, is it a good idea or a bad idea? And I have seen that play out a thousand, if not a thousand,

• 27:01Speaker 01

  a million times. We are constantly surprised. The one you think is great is terrible. The one you think is terrible is great. It's impossible to know until you try it.

• 27:11Tim Ferriss?

  So personalized shampoo, custom dog food, were there any non-negotiables or non-negotiable aspects, characteristics of the ideas that you brainstormed? So for instance, listening to just the very short list, one of the questions that popped into my mind was, what percentage of these businesses that you're brainstorming were subscription based, right? Like were they, was that a prerequisite? Were there any prerequisites? Or was it all just blank slate?

• 27:43Speaker 01

  I think you've touched on one of the greatest ironies of the entire Netflix story, I think. Yes, there was absolutely prerequisites. And just to back up the story of a hair, I mentioned earlier that I had spent 15, 20 years as a direct marketing guy. You know, I had done everything in direct marketing. I had done catalogs, I'd done mail order, I'd done magazine circulation. In other words, subscription business.

• 28:09Speaker 01

  And so, when in 1996, 97, the internet was just starting to take off. And there's this little company called Amazon, which was actually starting to show some promise in selling books. I immediately, immediately saw that this was incredible. This was direct response on steroids. This was the most incredible tool for someone who was a direct marketer. And so, one prerequisite absolutely was, I was gonna do e-commerce. One of these ideas, it had to involve selling something on the internet. The second prerequisite, as you probably picked up from the personalized shampoo, custom

• 28:51Speaker 01

  dog food, another one was custom sporting equipment, like bats or surfboards, was that I wanted it to have a high degree of personalization. I mean, I had been at the cutting edge of direct mail personalization, but that was lame. That was the best we could do was, "Dear Tim Ferriss, won't all your friends and neighbors at 27, you know, Crescent Circle?" It was just so, so ridiculous. And I immediately saw that with the internet, we could create a custom page just for you. So that was a prerequisite. And yes, I wanted subscription. I wanted a recurring revenue business model.

• 29:33Speaker 01

  I wanted to sell once and then just fight to deliver a product that everyone wanted to keep. And this great irony is that Netflix started without subscription. I thought, there's no possible way I can do a subscription business in video rental by mail. But it was so compelling on the other dimensions. It was so compelling in terms of personalization, in terms of what we could do as an online site relative to what a bricks and mortar store like Blockbuster could do, that I decided this was worth pursuing even though it didn't have subscription. And just to get the punchline here, the reason that the book is called That'll Never Work,

• 30:16Speaker 01

  the reason that the blog is called That Will Never Work is because that is what every single person I pitched that idea told me. You know, my investors, my employees, my wife told me that'll never work. And they were right. It didn't work. And it took us a year and a half of one failed experiment after another, one test after the next. And the thing that eventually turned it around was subscription. I'm kicking myself even now.

• 30:43Tim Ferriss?

  Yeah, you guys had due dates, late fees, it's all à la carte.

• 30:46Speaker 01

  Absolutely.

• 30:51Tim Ferriss?

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• 31:34Tim Ferriss?

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• 32:20Tim Ferriss?

  You iterated. What did the approach to iteration look like? In other words, did you have a system? I think a lot of people test, but it's in a pretty ad hoc way. Maybe they keep good records, maybe they don't. How did you approach these tests over a year and a half?

• 32:41Speaker 01

  Well, it evolved and it evolved pretty quickly. You know, we launched this great excitement. It was April of 1998, so 23 years ago. Wow. And almost immediately realized there was good news and there was bad news. And the good news was we had a $100,000 month, but it was all selling DVDs. And that was kind of almost this last, almost an afterthought of selling DVDs. And the rental was sucking wind. We were doing about 2% of our revenue in rental because nobody would do it. And we go, okay, we got to try some new things to try and unlock this rental business. And the problem wasn't that I didn't have ideas of things I wanted to try.

• 33:26Speaker 01

  I had tons of ideas. The problem is that back then I was a bit of a perfectionist. And so the tests we put together would be these mini works of art. We'd do custom photography or we would lovingly craft and argue all the copy. We would spell check it and have copy editors review it. And we would stress test the site and check every link. And as you can imagine, that would take two weeks to put together. And then the test would fail. And we'd look at each other and say, we just wasted two weeks. And we'd say, okay, faster. And we'd cut some corners and do a test a week. And it would fail. And then we'd cut some more corners and we'd begin to do a test every other day. And then pretty soon a test every day.

• 34:08Speaker 01

  And soon we were doing four and five tests in the same day. And as you can imagine, they're getting pretty sloppy by then. You know, there's misspellings, there's the wrong image, the watermark is still in it. We're crashing the site and the links don't work. I mean, it is so sloppy. But this learning, it was incredible because we realized it didn't make a difference. That no matter how crappy this test was, that...

• 34:40Speaker 01

  It was still going to surface things. So in other words, if it was a bad idea, even these beautiful two-week tests didn't make it a good idea. But if we had stumbled on something interesting, even with these unbelievable mistakes and crashed sites and dead links, people still would raise their hand. They would shine the spotlight. They would call us. They would come to the door. And then you saw as plain as day what was working and what you had to then fix. And it always surprised us. And so this insight informed everything from then on. And this insight was that it was not about having good ideas.

• 35:20Speaker 01

  It was about building this system and this process and this culture for testing lots of bad ideas. And Netflix has never turned back from that. I've never turned back from that. I've realized that the key to being successful is not how good your ideas are, it's how good you are at being able to find quick, cheap, and easy ways to try your ideas. That's what I look for now in entrepreneurs. That's what sets apart the good ones from the mediocre ones.

• 35:50Tim Ferriss?

  So let's double-click on that because this is exciting territory. So if we just grab sort of an analogous, let's say it's a comparison, it's a metaphor, choose your word, but in the world of science, scientific research, the scientific method, really, it's like science per se isn't this kind of god with a lab coat on. But the scientific method is a way of testing hypotheses, but the scientific method itself doesn't generate good hypotheses, right? So there's something to be said for certain assumptions that are made, certain assumptions that are tested that come up then with the ideas or the statements to be tested. And when I'm listening to you describe this story, I would imagine there are many entrepreneurs

• 36:34Tim Ferriss?

  who, after a period of time, when they look at their revenue breakdown and they see 98% DVD sales, 2% DVD rentals, they say, you know what? Great, we're going to double down on DVD sales because that is the signal we are getting. That is the product-market fit that we are seeing. And they would have become the, I don't remember the exact name of Columbia Records, or these various outfits that would sell music by mail, right? So you'd become the equivalent or sort of the Amazon of DVD sales. Why didn't you do that?

• 37:07Speaker 01

  You know, doing a startup is kind of like riding a mountain bike downhill, which you've got to spend like 95% of your time staring five to 10 feet in front of you. But every so often, you've got to look up and see where you're going. And we were basically struggling to hang on to doing that $100,000 first month. But every time you looked up, you did not like what you saw. Amazon, which right then was just selling books, had made no secret of the fact that they wanted to be the everything store. And we knew that the next category they was going to go into was music and movies. We knew that pretty soon, once DVD got a foothold,

• 37:50Speaker 01

  that Walmart would begin selling DVDs, that Kmart would begin selling DVDs, that Petsmart would sell DVDs, that everybody would be selling DVDs. And we didn't think we could or want to compete and was essentially going to be a commodities business. So the challenge was, wow, how do we get out of this? How do we jump from a dead-end business, which is paying all of our salaries so we can ride it for a while, but how are we ultimately going to make the rental part successful? Because that's the only one which we think we can sustainably maintain. And the challenge here was doubly bad because doing both things at the same time was really nasty.

• 38:36Speaker 01

  I mean, selling and renting was confusing to customers. It was really hard to describe what we did clearly. And operationally, it was complicated. I mean, the checkout process was really complicated. Our metrics and analytics were all confused. The warehousing, the inventory. And the insight that came here was that we couldn't do both. That if we were going to be successful, we had to pick one of them. And so the challenge for us was like, which one? And as you mentioned, the temptation. The easy path was basically to say, well, let's stick with sales. It's paying 98% of our revenue. We'll figure it out. But on the other hand, if we could get Rental to Work, that could be a huge business.

• 39:20Speaker 01

  And one that we could probably own because it was so operationally complex, because the margins are so good. And it points to this other incredibly important attribute for entrepreneurship, besides this predisposition to action that I was talking about earlier, which is courage. You have to have the willingness and the confidence to walk away from sure mediocrity to bet everything on the long shot of a big success. And that's just balls. You've got to say, "I'm going to bet we can figure this out, and so let's, let's bet." And in Netflix's case, you know, we did that.

• 40:02Speaker 01

  We, almost six months in, decided that all the things that were happening with sales was just making it harder. And so we stopped in a single day and walked away from 98% of our revenue and said, "If we're going to make it, we're going to make it as a rental company."

• 40:17Tim Ferriss?

  Was part of that predicated on thinking of your, now this is not quite the right term, but kind of exit strategy and the type of business you were building, in so much as thinking about kind of go big or go home. This is either going to be a publicly traded company, or it's going to be zero. This is not a lifestyle business. We don't want a lifestyle business. Therefore, we are going to bet on this, we're going to bet on that 2%. We're going to bet that we can turn that into 100%. And was any of that predicated on the possible outcomes that you had seen as your menu of options?

• 40:49Speaker 01

  That's really, I wish I could have, wish you could have seen my face as you were asking that question. Because I sincerely don't think I ever had ever crossed my mind one way or the other. Seriously. I never was thinking, oh, there never was an exit strategy. I never, at Netflix or any of the other preceding startups that I did, thought about that. This was all about solving a really interesting problem.

• 41:19Speaker 01

  And the path to solving that really interesting problem led through having to be willing to walk away from the sales because that was not helping us solve the big problem. There are realities to the business, of course. You need financial permission to keep going. But I certainly wasn't thinking, oh, mediocre success could be a nice lifestyle business. It was more that I was caught up in the excitement and intellectual stimulation of saying, wouldn't it be incredible if we could figure out a new model using the internet to be a better way for people to rent movies? And that's what I thought about every morning

• 42:03Speaker 01

  when I came to work. That's what I thought about all day. That's what I thought about when I went home. That doesn't lend itself to thinking, oh, I could probably get out easy here, or I could return money to the investors and go home. Never part of the plan.

• 42:14Tim Ferriss?

  How did you think about naming the company? What were some of the best, worst ideas that you or anyone else had?

• 42:22Speaker 01

  Yeah. You know, naming a company is brutally hard because the criteria for a good name has a lot of elements to it. I mean, for one, you'd like something that was evocative of what you were trying to do. You want it to be easy to spell. You want it to have the dot com available and maybe the dot biz and whatever the other possible things. You want to make sure you can also get alternate spellings. You want to make sure it doesn't mean some terrible obscenity in Lithuanian. You know, you want to make sure you can get a trademark. You want it. Now you need to make sure, can I get the Twitter handle?

• 43:04Speaker 01

  Can I get Snap? Can I get TikTok? I mean, you need to cover all these bases. And it's really hard now, and it was really hard then. And it's so hard that, well, so when you start, when you found the company, when you actually incorporate and you say, okay, now I've got to begin paying people. I need to have checks. I need to enter into contracts. You're not ready to go through that huge uphill battle to figure out your name. You just come up with what's called a beta name. It's the name you're going to use while you're kind of getting ready to launch. And our beta name at Netflix, this is kind of a little Netflix trivia, was actually called Kibble. We were kibble.com, like the dog food.

• 43:46Tim Ferriss?

  You'd been infected by the custom dog food idea. That's great.

• 43:51Speaker 01

  Yeah, and I just happened to own Kibble, probably because I was so excited about the custom dog food idea. And, but the thing is, when I had a person who was one of my early investors at Netflix, as a matter of fact, but on a board, but also a friend of mine who I had done a startup with in the past, who gave me the advice, and he said, Mark, when you're picking your beta name, pick something so bad that when you finally get to the point you're trying to pick your real name, and you're really struggling, you won't be tempted to use your beta name. So, that was the other advice.

• 44:25Tim Ferriss?

  Yes, that's good advice.

• 44:26Speaker 01

  So, we were struggling, of course, and we're getting to the end, you know, we're getting probably only two or three weeks away from launch, and we still don't have a name, and so we go, okay, we're gonna have to force this one. And we got everyone in a conference room, and we, on a whiteboard, made two columns. And in one, we brainstormed every possible word that was evocative of the internet. You know, net, and web, and e. And in the other column, we brainstormed words that were evocative of video or rental. And then began drawing all the, you know, the crisscrossing lines between them. And, you know, some of them were, I thought, pretty good. My favorite, actually, was replay.com, which I thought, oh, that's pretty cool.

• 45:11Speaker 01

  But replay was available, but it cost $40,000. And they may as well have quoted me $40 million at that point, that I wasn't gonna pay $40,000 for a domain name. Another one was cinemacentr.com. And then we had all the other variations. We had webflix, we had Netflix with a CKS, we had, you know, all these crazy names. And Netflix was far and away no one's favorite. And I don't know whether you remember this, Tim, but back in the, you know, in the 60s and 70s, the nickname for porno used to be a skin flick.

• 45:52Speaker 01

  Or skin flicks. And everyone's going, no, we can't call it flicks. And that X, that X is even worse. But, you know, after a while, you're going on the list and you go, I can't get the domain name, I can't get the trademark, this is already being used in Canada. And then finally you go, okay, listen, we gotta make a decision. And, you know, Netflix was a little porny, but it was the best we could do.

• 46:19Tim Ferriss?

  And I just want to underscore one thing you said that's really important. Likely, at least at the time, available as a trademark across the board.

• 46:27Speaker 01

  Right.

• 46:27Tim Ferriss?

  Domestically and internationally. If you look at something like replay.com, or even Netflix with a CKS, you can, stretching a little bit here, but you can get into kind of descriptive murky territory. And like you said, there are these checkboxes that are really important to look at very closely. A friend of mine, because we're recording this during the GameStop mania and excitement, you know, a friend of mine was thinking of using the sort of WSB, Wall Street Bets, et cetera, for a sort of spinoff business of sorts. And, and he was about to put a bunch of money into developing it. And I said, before you do that, make sure you go to uspto.gov, take a look at who owns any trademarks. And you may just dodge a massive bullet, which he, which he ended up doing.

• 47:12Tim Ferriss?

  So Netflix, so we have Netflix. Now, you've invoked a name, and the name is, is one of the demigods, maybe even a major, not lesser god of e-commerce. And that is Jeff Bezos. So less than a year into this Netflix, little porny but effective journey, you get, you get a call from none other than Jeff Bezos, inquiring about potentially buying the company. Can you tell me about your trip to Seattle, or anything else about that exchange?

• 47:44Speaker 01

  Well, you've got to understand how it felt for me to get a call from Jeff Bezos. I mean, this was two things. First of all, this was the idea that Everybody said, "That'll never work." This is the idea that no one had confidence in. And to get a call from Jeff Bezos, I mean, the pioneer, the king of e-commerce? Oh, my gosh, the validation. It was like, okay, someone, not just someone, not just anyone, but Jeff Bezos sees potential in this. So it was this tremendously exciting moment. And, you know, when he called, he was a little cagey. It was like, you know, "Listen, I'd love to come on up to Seattle. I'd love to meet you guys.

• 48:28Speaker 01

  Let's just come on up and we'll get acquainted." So he didn't come out right out and say he wanted to buy the company. But it didn't take, you know, rocket science to figure out that's what this meeting was going to be about. As I mentioned earlier, they were just books at that point. And we knew that video or music or both was next on the list. And so I was pretty sure that Netflix was a candidate to be a make or buy evaluation. In other words, maybe you could jumpstart into video by buying us. So Reid and I flew up to Seattle. And this is pre, you know, pre-Waze and pre-Google Maps. We had printed out the map from a site called MapQuest. MapQuest, I knew it was coming.

• 49:13Speaker 01

  If you can remember those days. And I was so sure that Reid had fucked this up, if you'll pardon me. Because we were in, we were in a pretty sketchy part of town. I mean, we're walking, there's broken glass on the sidewalk. There's people sleeping in the doorways. There's hypodermic needles, there's sex shops. And I go, "There's no way that the pioneers of e-commerce are here." But yes, you turn the corner and there, and this old warehousey building, through these dusty plate glass windows, I could see in and see that there was a sign, lo and behold, "Amazon." And we go in.

• 49:57Speaker 01

  And it's, you can't picture this because it is jammed to the gills with people and dogs and pizza boxes and printers stacked on top of piles of books. And people are crammed in five or six to a cubicle. They get ushered into this conference room and the conference table is four doors that are obviously not in doorways, they're on sawhorses. We push together to make a conference table. And in fact, as you're walking in, we had noticed that every single person was working at a desk made out of a door. And it was, wow, this is pretty crazy.

• 50:41Speaker 01

  And we had this great conversation because Jeff and I kind of were totally riffing on this excitement of starting these companies. And he was talking about when he had rigged up a bell that would ring every time an order came in, which is exactly what we had done. So we had this kind of opening day excitement stories to tell. But of course, we got down to business and in fact, yes, they were interested in perhaps using Netflix to jumpstart into video and they talked to us, understood everything. And on the way out, we had the CFO of Amazon escorted us out and kind of did the hints. She goes, you know, in the event this happened, which is set expectations, it's probably going to be in the 10 to 15 million dollar range.

• 51:25Speaker 01

  And that wouldn't have been so bad for something I've been working on for less than 12 months. You know, and at the time, I owned 40% of the company. But it was really interesting what Reed and I talked about on the flight home. Because again, this is the company that everyone had said will never work, but we had managed to put together an e-commerce website. We had managed to find a copy of every single DVD available at the time. We had forged these partnerships with all the DVD player manufacturers that were bringing us in customers. And it felt like at that moment that we had got it all figured out.

• 52:07Speaker 01

  And we kind of looked at each other and said, I don't think we're ready to hand someone else the keys. And so in some ways, this wasn't a trip up to sell the company, or maybe the trip up was to sell a company, but on the way back, it felt more like a commitment ceremony, where we kind of had to look each other in the eyes and say, are we in or are we not in? And I think luckily for the rest of the story, we were in.

• 52:35Tim Ferriss?

  So you've described the flight out. I would love to hear you talk about the flight in. And maybe it's part of this extends to well before that. But how did you prepare for or strategize for the Amazon meeting?

• 52:50Speaker 01

  Oh, the depths of

• 52:54Tim Ferriss?

  And the reason I ask in part, sorry to interrupt you and me both, but part of the reason I ask is that you mentioned a term that I think is really important. And that is the buyer build decision, right? So Amazon can use you to jumpstart their video business, but they could also choose to build it themselves. And sometimes, big companies, I'm not saying this is what Amazon did, but sometimes, big companies will invite smaller companies in to have them open the kimono, so to speak, and share lots and lots and lots and lots of details, sometimes undercover of due diligence, so that they can then go ahead and just build everything a lot faster internally, right? That does

• 53:35Tim Ferriss?

  happen. I'm not saying with Amazon, but it does happen. So I'd love to hear how you guys prepared for this meeting.

• 53:41Speaker 01

  So, you know, I'd been in Silicon Valley for 10 years by that point. I knew that was certainly one of the components of someone's interest. I knew there was always the chance that they'd just pick our brains and do it themselves. And so that navigation wasn't particularly tricky because we knew going in what to expect. But I much prefer to be pretty forthcoming. And I've always believed it's better to assume good about people than to protect myself from bad. I'm willing to get burned, because normally it works better for me if I go in being vulnerable and honest. But the real story

• 54:25Speaker 01

  of the preparation, you know, I laughed when you mentioned that, because it really is in some ways, Maybe it's a flaw of mine, but the best is that I am a ridiculous over-preparer for important things in my life. And just to give you a really quick example of this from way earlier in my life, you know, I was a second baseman when I was playing high school baseball, which is the, that was the, basically, the end of my baseball careers, as far as I got. But I thought I was a pretty good high school second baseman. And one of the jobs of a second baseman is to back up first base when a throw goes to first. And there was one particular game where all of a sudden, a throw came to first base and missed first base.

• 55:08Speaker 01

  And amazingly enough, I happened to be back there and snagged the ball and threw the runner out at second. And when I came in, you know, the coach was going, "That was amazing. How did you know to be back there for that play?" And it was puzzling to me, because I said, "I am back there every pitch. I run behind set first base every pitch." And that's how I treat these kind of negotiations. I'm ready for pretty much anything. I think deeply about what could this meeting be about? What are the questions they're going to ask? What do they really want to know? What are the best way to position our company favorably? What do I need to understand about Amazon to make the decision about whether I might want to have the company sold to them?

• 55:53Speaker 01

  And then I go through what my answers might be. And of course, you've prepared 100 different answers, and you only end up using eight of them. But that's okay. That just means that it comes off more, more positively for you. Don't try this at home, folks.

• 56:08Tim Ferriss?

  Yeah, so that'll never work. You heard it over and over again, from possible sources of financing, from everybody left and right. With respect to Netflix, what were the biggest things that people missed or got wrong in terms of assumptions about Netflix that led them to conclude that'll never work? And I'll give just a quick example with, say, Uber, for instance. Early on, they were turned down by everybody for financing, just about, because it was assumed that whatever market they had, their total addressable market, it was a fraction of whatever the current on-demand black sedan...

• 56:43Tim Ferriss?

  Car service market was, and that was an incorrect assumption because ultimately Uber Black ended up funding the R and D and subsidizing what later became Uber X. And before you know it, the market expands exponentially. So what were people missing or getting wrong that led them to say that'll never work?

• 57:02Speaker 01

  There was two reasons that almost everybody drew on to conclude that'll never work. And the first was Blockbuster. That here we were, this tiny little upstart, everyone said Blockbuster is the problem. And that just makes sense because Blockbuster at the time had 9,000 stores. They had 60,000 employees. They were doing $6 billion in revenue. And the thought that we could get a foothold against that, and worse, it wasn't just getting a foothold against a bigger company, it was basically saying, we're proposing a model where you come to the internet and you order a movie and we mail it to you. And it's going

• 57:47Speaker 01

  to take anywhere from one to four days for that movie to arrive. And people could not get their hands around how that could possibly work when you could pretty much throw a stone from any place in the United States and hit a Blockbuster. Why would anybody do it through you when they could just drive five minutes and rent from Blockbuster? And they had a point. We did have some things up our sleeve, basically the fact that everyone hated Blockbuster. You always want to compete against someone that everyone else hates.

• 58:18Tim Ferriss?

  Why did they hate Blockbuster?

• 58:21Speaker 01

  Blockbuster, part of it was Blockbuster's attitude. Blockbuster did not believe that they were in the customer service business. And so people were frustrated with the experience. They also relied in their business model on late fees.

• 58:40Tim Ferriss?

  Late fees. Oh, I remember that.

• 58:44Speaker 01

  In fact, they actually had an internal term for it. And they called it managed dissatisfaction.

• 58:50Tim Ferriss?

  Oh, my God. That's great.

• 58:54Speaker 01

  And you always want to compete with someone whose core tenet is managed dissatisfaction.

• 59:01Speaker 01

  They also had a problem that because they were really on the demand fulfillment side, that they had this new release issue where a new release would come out and people like Lemmings would all flock to the Blockbuster and they would all want the same movie. And of course Blockbuster can't afford to buy enough copies to satisfy every single person who wants it on day one because their whole model is you buy it once and then you turn it 20 or 30 times. And so what they have to do is basically say, we're going to have a lot of people not getting the movie they came in for. And that will force them to come back again and rent it next week or the week after so they can get the turns

• 59:44Speaker 01

  out of it. So all these things were fundamentally frustrating to customers. And Discovery, you know, the reason that everyone flocked to new releases was it was so hard to find something else to watch that you would do that, if you may remember this, you'd go to the store and you basically begin doing this pacing like a tiger you see at the zoo, up and down each aisles, just hoping something leaps out at you that you haven't seen before, that you've heard of, that you want to watch. And so you naturally gravitate to the new release wall, not because they're better movies, because it's a higher percentage of movies you haven't seen yet. Anyway, lots and lots of reasons we go. This should be disruptable. But Blockbuster was just one reason. The other reason everyone said that'll

• 1:00:29Speaker 01

  never work was the fact that the DVD was digital, was a digital medium. And everyone said, well, just a matter of time, months before this movie can be downloaded or streamed. Who's going to want to get it on DVD when they can just stream it to their house? And they were right about that latter one. You know, we thought they were wrong about the timing, that it would be a long shot if it was going to happen in a few months. We thought it was going to be years. But nonetheless, both of those were very reasonable objections about why this business would never work. And we really had to attack both of those if we were going to be successful.

• 1:01:09Tim Ferriss?

  So you invoked?

• 1:01:12Tim Ferriss?

  Darth Vader in this particular, in this particular movie Blockbuster. And although the story of Blockbuster is also kind of amazing, I mean, just the, you know, Huizenga and the entire, the entire arc of that is just amazing in and of itself. But two years in, the perfect story of bad news, as I have it here, led you to fly, not to Amazon, but to Dallas to try to sell Netflix to Blockbuster. What happened there? What was the bad news? And how did that trip to Blockbuster go?

• 1:01:43Speaker 01

  These stories have such twists and turns and ironic moments. You know, we started, we spoke earlier in our conversation about the, the struggle to find the, as they say, repeatable, scalable business model. How when we launched, it didn't work. How we had to figure out how to get rental to work and how we struggled for a year and a half. And that eventually the thing that worked was this completely irrational combination of things. One of them, as I mentioned before, was subscription. But the other thing was that one day I was in our warehouse and at the time, we probably had several hundred thousand DVDs in the warehouse.

• 1:02:26Speaker 01

  And I remember looking around at these full shelves and thinking, what a shame. They're doing us no good sitting on the shelf. I wonder if there's some way to store these movies at our customers' houses. Let them just keep them. And maybe they do, I don't know, peer-to-peer exchange. Maybe they keep it as long as they want. When they want another one, they mail it back and we'll replace it. And that idea, when combined with subscription, was worth a test. And when we tested it, finally, you know, after a year and a half, it worked. And it worked remarkably well. It took off. I mean, people were signing up in droves, thousands a week for this new no due dates, no late fees, subscription video rental program.

• 1:03:12Speaker 01

  Now, that's a great story. But as you may know about the subscription business, it has some great things about it and some bad things about it. And the great thing about it is its recurring revenue. Once you've acquired that customer, if you take good care of them, they pay you month after month after month for years if you do a good job. The downside is, all the acquisition cost takes place upfront. All the money you spend on marketing and fulfillment and customer service to get that customer is out the door. And it's usually a number way in excess of how much they pay you that first month. It takes having them be a customer for six to 12 months, or even longer sometimes, to

• 1:03:56Speaker 01

  recover that marketing expense. So, when orders are flooding in the door, on one hand, you're going, "This is fantastic." But it also means that money is flying out the door. And that is not so fantastic. And it's especially not so fantastic when you get to April of the year 2000, when all the wheels suddenly come off the cart of the dot-com bubble. If I can mangle two metaphors there, sorry. But, in other words, what had been easy in March, basically, we'd just go outside the Netflix headquarters, we'd wave the green flag, and the big dump truck full of money would back up and dump it into the driveway, and we'd send everyone out with the wheelbarrows to bring the money in.

• 1:04:40Speaker 01

  All of a sudden, you get to April, and the drivers are putting their head down, averting their eyes, and speeding past you. There is not a cent to be had, especially not for a company with dot-com in its name. So, we're desperate. We have finally cracked the code. We're succeeding, but we're going bankrupt in our success. And that was probably the lowest moment. And we, Reed and I, looked at each other and basically decided, "This is the time to," as they refer to it, "time to pursue strategic alternatives."

• 1:05:14Speaker 01

  Which is the Silicon Valley expression for basically, you've got to sell this sucker, you know, and fast. And the obvious strategic alternative at the time was, of course, Blockbuster. But, you know, they were huge. There were $6 billion in revenue. We were $5 million in revenue. We were 100 employees and they were 60,000 employees. So, you know, we tried getting this meeting, nothing. You know, wouldn't return the calls, wouldn't respond to the emails. So, this is all preamble to this meeting with Blockbuster, but it's such a crazy story. The time they chose to call happened to be, we were doing this corporate retreat at a place called the Alisal Ranch, which is in the foothills outside of Santa

• 1:05:54Speaker 01

  Barbara. And as you can imagine, it's pretty casual, because not only are we casual at work, so when you go to a retreat, you got to work at it. And I had brought nothing but t-shirts and flip flops and shorts. And that's when they call and say, "We'd love to see you tomorrow morning in Dallas." And we're looking at each other and going, "There is no way. We can't get from this ranch in Santa Barbara to Dallas by tomorrow morning." And so, we did the thing that you would prudently do when you're many millions of dollars in the hole, which is we chartered a corporate jet to fly us to Dallas. Oh, this is perfect.

• 1:06:35Speaker 01

  So, I'll share with you one more piece of Netflix trivia. So, that jet was owned by Vanna White of... Okay, didn't see that coming. But anyway, we fly to Dallas. We end up being ushered up into this big 17 or 18-story glass and steel skyscraper. And they bring us into this conference room, which is the size of a football field, and this beautiful endangered hardwood conference table. And I remember sitting there going, "Oh, my God. Every place has like paper and a pen and there's..." I go, "But they've got extra office supplies. This is something." And then in come the Blockbuster guys, and they're in their very expensive clothes and, you

• 1:07:19Speaker 01

  know, alligator shoes, which is in contrast to me, who's in a t-shirt and shorts and flip flops.

• 1:07:28Speaker 01

  I was jealous because Reed had on a Hawaiian shirt. He had buttons. But anyway, we make our pitch. And we're going to combine forces that we will run the online part of the business. Blockbuster will run the stores. We laid out all the incredible synergies that come from having this blended model business. And then we'd all live happily ever after. And it was going great. You know, they were, they were leaning in. They were asking good questions. And then they asked, of course, the obvious question, which is, how much? How much are we going to pay for you guys? And we had obviously rehearsed this one on the plane.

• 1:08:09Speaker 01

  So Reed screwed up his courage and kind of leaned in and said, $50 million? And they laughed at us. I mean, maybe not out loud, but I swear John Antioco was like trying to hold back a laugh. And as you can imagine, the meeting went downhill pretty quickly after that. And it was this long, quiet ride in the cab back to the airport and an even quieter ride back to Santa Barbara on the plane. And it was a crushing moment. Because we had finally gotten this meeting.

• 1:08:49Speaker 01

  It was self evident to us that this blended model of online and stores could be an incredibly powerful force and Blockbuster hadn't seen it. And so now, rather than this being the, you know, as I say in the movies, the Deus Ex Machina moment where the heroes are backed up against the cliff and the Indians are lining the cliffs and they're, they're, there's sudden death and all of a sudden in comes the cavalry and plucks them to safety. But unfortunately, not only was Blockbuster not going to save us, Blockbuster was going to compete with us. And wow, that was sobering.

• 1:09:30Speaker 01

  And as we got back and said to ourselves, what's going to happen? It was this realization that this was one of those problems that there wasn't going to be a shortcut. There was not an easy way out. There was not something we missed. That, you know, as my dad used to say to me sometimes, you know, Mark, sometimes the only way out is through. That we are going to have to confront this head on and take on Blockbuster. And you know, it took us, I don't know, 10 plus years, but eventually, you know, the company that had 9,000 stores is down to one. And the company they could have bought

• 1:10:11Speaker 01

  for $50 million is now worth $250 billion. It's such an amazing turn when I think back to that moment to where Netflix is today. But Tim, the amazing thing here is that when I tell that story to people, there's this dichotomy of reactions. Because for the people who are the entrepreneurs, they're going, oh, this is so inspiring. You know, like a handful of people with no experience in the video industry took down a $6 billion company. But sometimes I tell that story to corporate audiences and for them, it's a very different message. Because then it's basically, you have no idea who's coming after you. And they're going to come after you not doing the thing you do well. They're

• 1:10:56Speaker 01

  going to come after you doing the thing you do poorly, or you don't do at all, or you're scared to do.

• 1:11:01Tim Ferriss?

  Watch out for the people you consider rounding errors.

• 1:11:05Speaker 01

  Touche.

• 1:11:06Tim Ferriss?

  As one Yahoo executive said to a friend of mine, Alexis Ohanian, who co-founded Reddit, he said, oh, you guys are a rounding error in a meeting, looking at their traffic. Didn't turn out so well for Yahoo.

• 1:11:19Speaker 01

  Love that.

• 1:11:19Tim Ferriss?

  Question I have, so I can see it from a number of different perspectives. And first question I'd like to ask is related to your reputation for not accepting no as an answer, right? So I'm trying to zoom in because hindsight 2020, of course, it makes an excellent story, but there are lots of startups that go out of business. There are lots of startups that don't survive the existential threats and the economic meltdowns. They just do not make it through. So when I go back to that point in time, you guys offer or suggest, propose 50 million, they basically laugh. Why didn't you keep dropping the price until you found a price they would accept? I'm not saying you should have done that. I'm

• 1:12:02Tim Ferriss?

  just wondering, it must have been a whole mix of emotions. Why not look for the soft landing at a lower price? Or find a price that would finally be a yes?

• 1:12:16Speaker 01

  I think there was a couple of things.

• 1:12:20Speaker 01

  We hadn't picked $50 million at random. On one hand, it had no underpinnings in valuation. This wasn't based on multiples of next 12 months revenue or anything that you'd normally use to value a business that you were trying actively to sell. It was based on two things. It was based on, number one, we had raised $50 million to date and had spent most of it. And this was a way for Reid and I to make our investors whole. And that if it was going to be dramatically less than that, we were less interested. The other one was the reasoning we thought that would make $50 million reasonable was

• 1:13:05Speaker 01

  not what was Netflix worth to someone as an ongoing Netflix, but what would it be worth to Blockbuster, to their $6 billion in revenue, to have a team of people who were deeply involved in the technology of video rental, which quite frankly Blockbuster wasn't. And so we thought that them recovering their investment many times over purely by getting a small bump in the $6 billion revenue would make it work. But neither of those reasonings for them resonated. And so I don't think this was a question of, well, maybe 40, maybe 35.

• 1:13:47Speaker 01

  I think they would have gone back to some cash flow analysis or some next 12-month revenue, and that would have been dramatically, dramatically less. Sufficient that it wasn't worth us recovering pennies in the dollars for investor. Better for us to say, well, screw it. Let's prove these guys wrong.

• 1:14:06Tim Ferriss?

  So next I want to bring up, I would love to hear you explain something that I see referred to as the Canada Principle. Now, I'm just gonna, I want to read a line here, which is from, it's on BGR.com, but this is a quote from you, please feel free to correct me if I'm wrong. "I'd certainly be extremely surprised to ever see ads on Netflix, only because Netflix is so focused on the Canada Principle." What in the hell is the Canada Principle?

• 1:14:33Speaker 01

  So, the Canada Principle. When you're starting out, as we were in the United States, and you're starting to get a little bit of traction, so this may be we're past the Blockbuster thing, our subscription, no due dates, no late fee program is doing gangbusters. And people say, "You should go into Canada." That'd be an easy 10% bump in your revenues. Because, you know, Canada is approximately 10% the market size of the United States. At first, you go, "Well, that's kind of interesting. Yeah, that'd be a pretty easy way to just get a quick 10%." But then you begin to think about it and you go, "I'm not quite so sure about the easy." I mean, for one, they do have a different currency. Some of our DVDs have different rights arrangements in Canada than they do here.

• 1:15:17Speaker 01

  There's this little issue of language, that part of Canada actually speaks French. And in fact, legally mandates that the materials are in French as well as in English. And you begin accumulating all these small things, which under some circumstances, you might go, "That's not a bad price to pay for an additional 10% bump in your revenue." But what we realized is, we were growing so quickly at that point, that were we to take the exact same effort, as minimal as it might be, that it took to get into Canada and just apply it back on our core business, we would get a way bigger bump than 10%. And what the Canada principle really says is, you've got to focus.

• 1:15:59Speaker 01

  That the real key is picking the two or three things that are the most important, that if you get those right, nothing else matters, and allocate all of your resources to that. And you have to very, very consciously choose not to do things which appear easy. You've got to say, "Oh, oh, there's Netflix clones launching in the UK. Should we enter the UK to try and stamp them out, to beat them to the punch?" And you have to say, "No. We are way better taking the distraction that would occur doing that, and doubling down on the things that we're already good at." Because that learning, that acceleration, will just pay dividends down the road when we eventually do decide to enter the UK, for example.

• 1:16:43Speaker 01

  But that focus, that's at the heart of, I believe, what makes any startup successful, is not getting distracted. We used to also call, or refer to it as, scraping the barnacles off the hull. Because as you're moving, you're testing things, you're trying things, and you're slowly but surely accreting new features to your business.

• 1:17:05Speaker 01

  And of course, you have a new thing you want to try. And all of a sudden, it's got to be reverse compatible with this. And you want to change the price, but you go, wait a minute. What about that small group who have this different offer? And you have to consciously go into a meeting wherever you discuss what you're going to do next, and at the same time, discuss what are we going to stop doing? All those things designed to make sure you're putting all of your attention on the things that really matter.

• 1:17:31Tim Ferriss?

  I love that expression, the scraping the barnacles off the hull. It's so true. I mean, this is particularly true in, well, it's true in many things, but software development. I mean, you get paid for adding features, or you get rewarded for adding features as a programmer, seldom rewarded for removing features, which is how you end up with a lot of kind of bloated, over-featured software. One of the quotes from the same piece that I mentioned that I really like is, "These things which seem like low-hanging fruit never are. Ads are a distraction, never an additive thing." The follow-up to that that I have for you is, what were some of the most tempting opportunities that in retrospect were most important to say no to? You've mentioned a couple, right?

• 1:18:14Tim Ferriss?

  Canada, you mentioned entering the UK. Were there any other temptations or internal pressures, anything that in retrospect were really important to have said no to?

• 1:18:25Speaker 01

  There was certainly the temptation to do soft-core or adult, not hardcore stuff, but adult content, only because that's such a huge driver of new technologies. And that took some discipline to say, we don't want to get entangled up in that. And not out of any moralistic preaching about what's appropriate or not appropriate, but purely because being a company which was, pretty much had customers in every single county in the United States, we just didn't want to self, leave ourselves vulnerable to a particular district attorney who was behind in the polls someplace and wanted to take down the smart alecky e-commerce folks way back in California. That was one we dodged early on.

• 1:19:07Speaker 01

  Games, people talked about we should do games, but it didn't take too much thinking to realize that games do not have the shelf life that movies do. Able to dodge that one. Probably the closest we came to getting distracted was as we approached what was going to be our first shot at an IPO, we had decided we were going to become a portal because portals was the business model de jour at the time, which basically said, no, no, you're not a movie rental site. You are everything movies. You're going to be where people come for showtimes. You're going to come to get reviews. You're going to be able to buy tickets. And we actually started on the path of building that out.

• 1:19:48Speaker 01

  And we put in place our IPO prospectus based on the fact that we were going to be a portal. And when the bubble burst in April of 2000 and we had to pull our IPO, that was such an unbelievably lucky break. Because if we had ended up going public as a portal, we would have been committed and we never could have made that work.

• 1:20:15Tim Ferriss?

  You know, a friend of mine, I'm blanking, it might be Mike Maples Jr. said to me, or actually, I think it's Brandon Stan of Humans of New York fame, but said, sometimes you need life to save you from what you want to give you what you need. Something along those lines. I'm paraphrasing, but yeah, sometimes those catastrophes are lucky breaks. I want to talk about something that is a bit of a 90 degree turn, but we've been, I think, talking a lot about strategy, about the business, about Netflix. And that's certainly on one side of the ledger. But while this is all happening, you have a personal life

• 1:20:59Tim Ferriss?

  to think about, to manage, well, poorly, or somewhere in between. And I want to read a paragraph about Tuesdays at 5pm. And then I'd love to discuss this because this is something that my girlfriend and I would like to work on. And here it is. And we feel free to fact check. I vowed early on, I was not going to be one of those entrepreneurs who is on his sixth startup and his sixth wife. So we had this tradition that every Tuesday without fail, 5pm, I left the office and my wife and I did a date night. And at first, when you announced that that's going to happen, everyone goes, yeah, yeah, yeah, sure. But I was serious. If there was a crisis, well, we're going to resolve by 5pm. Okay, you have to talk to me. Great. On the way to the car. Fantastic things happen. Can you please speak?

• 1:21:42Tim Ferriss?

  About this decision and how you stuck to it and implemented it. Because I know a lot of couples, and I'm part of one of them, who have kind of committed to this, but then it falls by the wayside. This happens a lot. And I would love to hear you tell your story and share any advice that you have for people who might want to emulate this.

• 1:22:04Speaker 01

  I've always had my priority to be balanced. And like everyone, I screwed it up. But I was able to self-correct right about when I turned 30. So of course, during my twenties and late twenties, I worked like a dog. And my girlfriend then, now my wife, you know, I think that was hard on the relationship. The fact that I would go in and work on weekends, I would be there till eight or nine o'clock at night, essentially squeezing in my relationship in whatever spare time was left from the business that I was working on. But I was also shortchanging not just her, I was shortchanging myself.

• 1:22:49Speaker 01

  You know, my passion is outdoors. You know, my passion is backcountry skiing and mountain biking and surfing and kayaking and alpine climbing. And these are not things that you can squeeze in between your 11 o'clock and your 1 o'clock calls. If you want to be able to continue to do those, you've got to make space for them. And so I kind of had this moment where I said, I am not going to lose these two important parts of my life, and began compartmentalizing. And that's when the date nights started. And it was not just Netflix, it was other companies prior to that where they saw this happen.

• 1:23:31Speaker 01

  And, you know, people talk all about corporate culture. And they write manifestos and they put together slideshows and they carve it in their building cornerstone. But, you know, culture is not what you say, it's what you do. And so people all preach about, we believe in balance and take care of yourself, and then they don't act it. And what was so fascinating about me having that discipline, that at least one night a week, I would leave at 5 o'clock. No matter what was going on is that once I got through the first two or three months of it, it got a measurably easier because people stopped asking. They stopped trying to put meetings on the calendar after five on Tuesdays. They realized they were going

• 1:24:16Speaker 01

  to have to resolve this crisis on their own, or do it before five if they wanted me to help. And the best part, the best part was that everyone else began realizing that they could do this. That they could not only leave at five o'clock on Tuesday because they realized there was nothing that I was going to drive that was going to pull them back. I was modeling how I really wanted the culture of that company to be. And I'm still pretty busy, but I still managed to get away and go for a five or six day backcountry skiing trip. I still get to fly up to, you know, northern Alaska and do two weeks in the No-Attack River because I make space for that and I prioritize that space. And the things I have

• 1:24:58Speaker 01

  to get done, I make sure I get them done before I leave and then prepare to get picked up by someone else while I'm gone and that I can jump back in when I return. And it's hard, but it's important. It does not happen if you wait until, let's see if I have enough time. It only happens if you make that time.

• 1:25:18Tim Ferriss?

  How did you land on Tuesday nights? And did it start off on a different night and just not work to end up on Tuesday?

• 1:25:27Speaker 01

  I don't remember. Yes, it moves around and it moves. So, you know, the shorthand every Tuesday is probably a little bit just making it a simpler story. The point is it's every week. And a lot of times the babysitter can't do it on a Tuesday, so fine, we're going to do it on a Thursday. But it wasn't so much the discipline of that, it was the fact that this is going to happen. And this is going to happen before anything else gets scheduled. But I would say by and large, it was Tuesdays or sometimes Wednesdays.

• 1:25:54Tim Ferriss?

  Could you tell a story of a time that it was stress tested where there was a crisis that was large enough or a situation that seemed important enough where you're like, God, I really, it would be, it would probably be best for the business for me to push date night. Are there any examples of how you've navigated that that you could share?

• 1:26:14Speaker 01

  Yes, of course there are. The founder of Knowles, a guy named Paul Petzel, used to say, "Rules are for fools." Because in the mountains, things happen. And even though all of your processes and systems, they do it one way. Sometimes you gotta do it a different way. And it's also like people I know who are really disciplined about their eating. Listen, once in a while, you gotta let loose. You've gotta be able to fall off the eating well wagon and have, you know, six slices of pizza. But it's fine as long as you get back on the next day. It's, you know, one of the core principles of meditation is that, oops, I've gotten distracted. Let's get back to it.

• 1:26:58Speaker 01

  So, yes, there were certainly circumstances where those Tuesday rules got broken. But they were dramatically the exception. And the trick was when recognizing when it happened and not to have that be the camel's nose under the tent. But to say that was a once in a long period exception. And certainly things that happens when Netflix went public. When we were fighting for our life with, you know, with Blockbuster. When there's personnel crises that I just have to be there for. But it's certainly, it's something that my partner, my best friend can understand. Because she sees that the consistency is there on the other side of it.

• 1:27:42Speaker 01

  And that if I'm saying this one time, I need to do this, that I'm not just making it up. Not an excuse.

• 1:27:48Tim Ferriss?

  Can you make any recommendations? So number one, I love the expression camel's nose under the tent. I've never heard that before in my life. It sounds amazing. Sounds like the, uh, it sounds like the good title for a parable of some type. And the, uh, the question I have is what advice could you give to people who want to implement a date night? Like, what are some tactical pieces of advice or best practices? Recommendations for those who are starting off with some training wheels? They don't even know what to do. Does that mean watching movie and eating popcorn? Is it going out and having dinner? Let's pretend that COVID doesn't exist just for the moment. What are some of the, what are some of the things you've learned over time? Any recommendations?

• 1:28:25Speaker 01

  Yeah, absolutely. So first of all, these aren't one size fits all. This worked for my wife and I. This worked for the type of business I was in where I was the boss and I could do this. Obviously, you may not be able to do this if you work for someone else. You can't just go, "I'm leaving at 5 o'clock. Thanks very much." It's recognizing the principle behind it and saying, "What would work for me?" That's part one. Part two is do not design a New Year's resolution with 18 different things in it. Any of us who've made resolutions know you're lucky if you can make one of them happen, no less trying to have this aspirational list of all the things that you think would be wonderful if they happened.

• 1:29:10Speaker 01

  So start small. Say, "I'm gonna put my phone away every Saturday from 9:00 in the morning until Sunday morning." And be present. And see how that feels. I mean, in other words, take steps which are possible. Take steps which are manageable. And then, the third thing I'd recommend is I'm a big believer in establishing habits. And this, of course, has been beaten to death, but doesn't make it any less true, is that pick something and try to stick with it. It is more important to find something that you can reasonably do over the long haul than it is to make this a huge jump, but not be able to hang on to it.

• 1:29:52Speaker 01

  And it's with practice, with realizing that, wow, if I don't do email all weekend, the world didn't end. You know, or if I say, "I'm gonna do it from after 5:00 on Sundays," that no one freaked out. "Maybe I can try something a little bit different in a few months." That's all. Doesn't need to be what I've done or what worked for me. It's what works for you. It's the principle. It's that...

• 1:30:19Speaker 01

  Business is secondary. I really believe that. You know, you can have all the money in the world, but if you don't have a strong relationship or you're not doing the things that make you happy when you're not at work, what's the point?

• 1:30:32Tim Ferriss?

  Let's talk about that type of clarity and specifically what I have down here in my notes is a moment of clarity that you experienced through which you found your purpose in life. So that's a statement I definitely want to unpack and that seems to have led to writing your book and ultimately to your new podcast. What was this moment of clarity? What was the purpose that you found clarity around?

• 1:30:56Speaker 01

  I've had two big phases in my life and I have to briefly have to give you the first piece because that'll explain what happened in the second one. And I've always believed that if you get older, you are incredibly lucky if you find out two things, two important things about yourself. And the first is what are you good at? And the second thing is what do you enjoy? And I was remarkably lucky early in my life, in my early twenties, to discover those things and even more lucky that they were both the same thing. And it was early-stage stuff. It was entrepreneurship. It was starting things. I love it. I love that challenge. I love the problem solving.

• 1:31:40Speaker 01

  I love sitting around the table with the smart people, solving really hard problems. And here's the immodesty alert. I'm actually really good at it. And just because I have some of those innate skills, maybe it's from all the direct marketing stuff, maybe it's just that I'm really good at focus or have an innate sense of triage. But I've been incredibly lucky that I've gotten to pursue that for 40 years. And I've started a bunch of companies, all of which were so exciting and so fun, and two of them which did remarkably well economically, too. And that was my purpose for the first fifty some odd years of my life. And then I had left Netflix and I had left Netflix back in two thousand two, two, no,

• 1:32:24Speaker 01

  two thousand three, so quite a while ago. And I was drifting a little bit. I mean, I was pretty fulfilled because I was mentoring other early-stage companies. I was working with entrepreneurs. I was kind of getting my fix. And then I got invited to come to Necker Island, which is Richard Branson's, you know, founder, Virgin, billionaire, his private island in the British West Indies, to come for four days and hang out on the beach and kite surf and party. And that's pretty special. And I said, no, thank you. And that decision lasted about as long as it took to tell my wife about it.

• 1:33:06Speaker 01

  And then all of a sudden, no, I'm canceling my boy's mountain bike week that I had planned for that same time and all of a sudden we're buying sunscreen. But we got it. It wasn't all going to be this fun and games. I was going to Necker Island because they wanted me to do a forty-minute presentation on turning dreams into realities for a conference of women, successful business owners. And the title of this conference was Finding Your Purpose. And I was going, I went to my wife, I go, ah, we'll go, I'll do my bit and then we'll spend three to four days on the beach. Not so bad. I went, gave my speech, and then decided I'd hang out and listen and find out what this finding your purpose stuff is all about.

• 1:33:50Speaker 01

  And I listened to the first speaker and then I sat down in the chair again. And then the second speaker and put my towel under my chair. And one day led into the next, to the next, and pretty much I had realized I had dramatically overbought on sunscreen. But it made me think, what is my purpose? I was here as a speaker, but it was speaking to me. And I was going, I have this amazing platform because Netflix has done remarkably well, largely since I left for the things that have nothing to do with me, except perhaps my DNA and the foundation I established. But because of it... People will, I can get 10,000 people to come sit and hear me speak for an hour. I can get thousands of people to read things that I've written.

• 1:34:34Speaker 01

  But what am I doing with that? What's the point? What do I really believe in that I want to use this thing for? And it was that, like you said, that moment of clarity where there was, I was not doing the right things with it. And I had to change it. And what I decided simply was this, that all this 40 years of being an entrepreneur and all these tips and tricks and secrets that I learned to get startups off the ground were, not surprisingly, the exact same tips and tricks and secrets and approaches and attitudes that you could use to get any idea off the ground. And that all of us have these great ideas, but that most of us never act on them.

• 1:35:17Speaker 01

  And I decided then and there that that was my purpose, was to give people that nudge, give them that support, give them that encouragement that says, I can do this. I can have this idea. I've always wanted to do this. It doesn't need to be a business. It could be, I'd love to live in the city, but I can't afford it. Well, how can I figure this out? Love to change jobs. How can I make that happen? How do I start? And it led to the book, you know, That Will Never Work, which on one hand is the starting and growing of Netflix, but it's really more fundamentally these lessons about how do you take an idea and make it real? For years, I've been mentoring early-stage companies. I've been doing these hour-long advisory calls when people write me and go, I'm struggling with this, with that.

• 1:36:01Speaker 01

  And I say, let's get on the phone for an hour and let me see what I can do to help. And about a year ago, I began recording those calls because I thought this might be interesting to somebody. And it was remarkable because when I did play these tapes for people, it totally resonated with them. They empathize with the protagonists who are struggling. Some of the tips I was giving them, they could apply to their own stories. And that fundamentally is what led to me saying, this is an opportunity to actually make it even more broadly available, which is what led to the That Will Never Work podcast, where it's basically not me, you know, interviewing people. It's me just doing what I do all the time, which is helping other early-stage entrepreneurs take that idea and make it real. Or take the idea they've already made real and bring it to the next level.

• 1:36:46Speaker 01

  Or turn their side gig into a real gig. It's been remarkable and it's just so fulfilling in that and to be quite honest, it's not entirely altruistic. I still get now to sit down with people and sit around that table and solve these really interesting problems, but I don't now need to stay until one in the morning working on it.

• 1:37:09Tim Ferriss?

  So that will never work, the podcast. This is where you dispense the advice, encouragement, and tough love to an assorted cast of characters, including struggling entrepreneurs. Could you give us a teaser of the format? It sounds like it's conversational, just like these phone calls that you recorded. Can you tell us about any of the people who make an appearance? Are the types of people?

• 1:37:36Speaker 01

  Well, what's really fascinating is when I started doing this, I kind of thought, I'm going to run out of topic, that we're going to hear the same things over and over again. How do I, you know, do I do an app? Or how do I raise money? But what you realize is everyone's struggling with something different. And they're all coming with these incredibly fascinating businesses. You know, one of the young women that I interviewed early on is that she worked for a pickup artist for 10 years, you know, the kind of people who train men to pick up women. And she finally said, this is totally awful. And she started a business that helps people find genuine connection, men and women, and is running

• 1:38:17Speaker 01

  these seminars to do that, but was struggling with how to build the funnel to end up making this an economically sustainable business. Well, that was a fascinating business. Another woman runs, and this is not the theme, so don't draw too many lines between these, she runs an erotic art gallery online and selling very, very high-end quality erotic art. But of course, the most obvious place for her to promote would be social media, but she keeps getting banned. And so she's struggling with how do I walk that fine line? How can I perhaps lean into this problem and become maybe a spokesperson for unreasonable censorship? Another person is on the verge of breaking ground on a 60,000-square-foot indoor adventure park.

• 1:39:03Speaker 01

  In Texas with things like zip lines and repellents and beer. Now, what could go wrong with that? But what he was calling about was he realizes that once this thing is open, that's an 80 to 100 hour work week. How is he going to maintain balance in his life with all of this happening? It's just, they've been, they're remarkable stories. They're interesting people. They're funny and I learned things and I'm hoping that people who are listening will not only be entertained, but also learn something as well.

• 1:39:36Tim Ferriss?

  Sounds incredible. I can't wait to listen. And that will never work can be found wherever podcasts are found. Or is there a particular outlet? Is it exclusive anywhere or is it non-exclusive and ubiquitous?

• 1:39:49Speaker 01

  Well, we're trying to make it ubiquitous, but I'm pretty sure unless you have some very obscure podcast platform that you prefer, well, you'll find it in all the obvious places.

• 1:39:58Tim Ferriss?

  Perfect. Well, I just have maybe one more question. One or two more questions for you. And this has been so much fun. So this is a question that sometimes leads to a dead end. So it's not always easy to answer, but I'll try it anyway because it's fun. And that is if you had a billboard, metaphorically speaking, on which you could put an image, a quote, a question, a fortune cookie, mantra, anything to get that message to billions of people, assuming they would understand what's up there. What might you put on such a billboard?

• 1:40:34Speaker 01

  Oh God. Oh, this question, you're not going to believe. Oh, this is real. It's, well, you know, we, early on, we said we, I would be very transparent and vulnerable because I actually, I've had this discussion with my family before. And a quick background on this.

• 1:40:52Tim Ferriss?

  Doesn't have to be quick. I've got all the time in the world.

• 1:40:54Speaker 01

  Okay, good.

• 1:40:54Tim Ferriss?

  Take your time.

• 1:40:55Speaker 01

  So four or five years ago, maybe a bit more, maybe 10 years ago, I was driving, I live in Santa Cruz, California, which is pretty much the most politically left-leaning city in the most politically left-leaning state. And I was driving by and it was one of those things where everyone was protesting. And I can't remember what the issue was, but it was one of those things like, you know, honk if you're for this. But everybody was for that. And I go, why are you, if you really believe so strongly in, in change? Why are you doing it here? That issue is going to win 99 to 1.

• 1:41:37Speaker 01

  Why don't you, why aren't you going and doing that on the corner in Arkansas? Whatever the politically opposite, polar opposite is from California, from Santa Cruz. And it gave me an idea, as always does. Usually when I come up with something that's a problem, instantly comes up with the idea. And I was going, what if you made a platform that allowed people to do that? Which is they have an issue they feel strongly about. How could they now express that concern but do so in a place where it actually might make a difference? Try and advocate for the issue you believe in in a place where that is actually being contested. And I don't mean presidential swing state things. I mean, small issues.

• 1:42:18Speaker 01

  And then I go, well, a cool thing would be if these were crowdsourced campaigns. And I think the way to test it is to do billboards. That we will do a crowdsourced contest for this issue of what the billboards should say, and then people will vote with their dollars on which billboard, with the understanding that whoever billboard wins, that all the money flows to that billboard. And then the money goes to actually running that billboard someplace else in the country or in the world. And of course, that idea didn't go anywhere. But, one of the things we were joking about is what would be the universal billboard to put up?

• 1:42:55Speaker 01

  And my family loves these types of exercises because they very quickly veer toward the absurd. So the reason I was so embarrassed that you asked this, and I will confess what the billboard we decided we would put up everywhere would be. And it would largely be to support horse owners that we, we know. And it would say hoof, okay? And then a big heart, and then ED. You know, hoof-hearted. That is the billboard.

• 1:43:29Speaker 01

  Oh God, I can't believe I said that. Well, I'll be in transparent.

• 1:43:34Tim Ferriss?

  Hoof-hearted or hoof love erectile dysfunction. Or there are so many different ways to read this. I like that it's kind of a

• 1:43:42Speaker 01

  You're gonna have to write it out.

• 1:43:43Tim Ferriss?

  It's kind of a Rorschach test. Yeah, it's kind of a Rorschach.

• 1:43:45Speaker 01

  It's like a license plate. It's a hoof hoof, H O F, then a picture of a heart and then E D. Hoof-hearted.

• 1:43:52Tim Ferriss?

  Oh, I get it. Hoof-hearted.

• 1:43:56Tim Ferriss?

  Hoof-hearted, hoof-hearted.

• 1:43:58Speaker 01

  Yeah.

• 1:43:59Tim Ferriss?

  I haven't lost hope in this billboard, universal billboard idea.

• 1:44:04Tim Ferriss?

  Mark, I would expect no less from Mark the Seagull Randolph. And this has been so much fun. I really appreciate you taking the time and I've greatly enjoyed this. Is there anything else you would like to say or share or request of this audience? Before we wrap up, any closing comments at all that you'd like to make?

• 1:44:25Speaker 01

  Certainly, I would, I would really have missed my chance if I didn't say something to the people who are listening here. I talked before about what kind of my whole purpose is trying to give them people this nudge and all my years as an entrepreneur, all my, you know, six, seven companies, all the people that I've worked with, all the companies I've coached, the most fundamental thing I've learned that separates the people is they start. They stop thinking and they start doing. And if I could encourage every single person here who has an idea, and I know you all have an idea. I know everyone who's taken a shower has had an idea. But what really separates people is the ones who actually get out of the shower and do something about it. To paraphrase Nolan Bushnell.

• 1:45:08Speaker 01

  And so I would just say, think about that. Think about the next time you have the idea that you don't make an excuse, that you don't say, well, I need a co-founder. Yeah, I need an MBA. I need financing. And that's ridiculous. If you have an idea, the only way you're going to find out if it's a good idea is to do it. So take that swing.

• 1:45:28Tim Ferriss?

  Here, here. Take that swing. MarkRandolph.com, at That Will Never Work on Instagram, Twitter, MB Randolph, Facebook, Mark B Randolph, LinkedIn, Mark Randolph. And of course, we'll link to all of these things and more in the show notes at tim.blog/podcast. Mark, thank you so much for all the time.

• 1:45:49Speaker 01

  Tim, it was such a pleasure. And thank you so much for the time. I really appreciate it.

• 1:45:55Tim Ferriss?

  And to everybody out there listening, thank you for tuning in. And until next time, get out there in the world, take that swing. Hey, guys. This is Tim again. Just a few more things before you take off. Number one, this is Five Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday that provides a little morsel of fun before the weekend? And Five Bullet Friday is a very short email where I share the coolest things I've found or that I've been pondering over the week. That could include favorite new albums that I've discovered. It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up in the world of the esoteric, as I do. It could

• 1:46:38Tim Ferriss?

  include favorite articles that I've read and that I've shared with my close friends, for instance. And it's very short. It's just a little tiny bite of goodness before you head off for the weekend. So if you want to receive that, check it out. Just go to fourhourworkweek.com. That's fourhourworkweek.com, all spelled out, and just drop in your email and you will get the very next one. And if you sign up, I hope you enjoy it. This podcast episode is brought to you by Helix Sleep. Sleep is super important to me. In the last few years, I've come to conclude it is the end all be all that all good things, good mood, good performance, good everything, seem to stem from good sleep. So I've tried

• 1:47:20Tim Ferriss?

  a lot to optimize it. I've tried pills and potions, all sorts of different mattresses, you name it. And for the last few years, I've been sleeping on a Helix Midnight Luxe mattress. I also have one in the guest bedroom. And feedback from friends has always been fantastic. It's something that they comment on. Helix Sleep has a quiz, takes about two minutes to complete, that matches your body type and sleep preferences to the perfect mattress for you. With Helix, there's a specific mattress for each and every body. That is your body, also your taste. So let's say you sleep on your side and like a super soft bed. No problem. Or if you're a back sleeper who likes a mattress that's as firm as a rock, they've got a mattress for you too.

• 1:48:01Tim Ferriss?

  Helix was selected as the number one best overall mattress pick of 2020 by GQ Magazine, Wired, Apartment Therapy, and many others. Just go to helixsleep.com/tim, take their two-minute sleep quiz, and they'll match you to a customized mattress that will give you the best sleep of your life. They have a 10-year warranty. You get to try it out for 100 nights, risk-free. They'll even pick it up from you if you don't love it. And now, my dear listeners, Helix is offering up to $200 off of all mattress orders and two free pillows at helixsleep.com/tim. These are not cheap pillows either, so getting two for free is an upgraded deal. So that's up to $200 off and two free pillows at helixsleep.com/tim.

• 1:48:45Tim Ferriss?

  That's helix, H-E-L-I-X, sleep.com/tim for up to $200 off. So, check it out one more time. Helix, H-E-L-I-X, sleep.com/tim. This episode is brought to you by Athletic Greens. I get asked all the time what I would take if I could only take one supplement. The answer is invariably Athletic Greens. I view it as all-in-one nutritional insurance. I recommended it, in fact, in The Four Hour Body. This is more than 10 years ago, and I did not get paid to do so. With approximately 75 vitamins, minerals, and whole-food sourced ingredients, it'd be very hard-pressed to find a more nutrient-dense and comprehensive formula on the market.

• 1:49:28Tim Ferriss?

  It has multivitamins, multimineral, greens complex, probiotics and prebiotics for gut health, an immunity formula, digestive enzymes, adaptogens, and much more. I usually take it once or twice a day, just to make sure I've covered my bases if I missed anything I'm not aware of. Of course, I focus on nutrient-dense meals to begin with. That's the basis. But Athletic Greens makes it easy to get a lot of nutrition when whole foods aren't readily available. From travel packets, I always have them in my bag when I'm zipping around. Right now Athletic Greens is giving my audience a special offer on top of their all-in-one formula, which is a free vitamin D supplement and five free travel packs with your first subscription purchase. Many of us are deficient in vitamin D. I've found

• 1:50:12Tim Ferriss?

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