Nearly two decades ago, the leadership team of a small DVD company filed into a large conference room at Blockbuster’s headquarters in Dallas. They came to pitch their 100-employee company and an idea they thought would disrupt how people watch movies. The company, now known as Netflix, asked for $50 million from Blockbuster, then an industry giant with about 9,000 stores.

Blockbuster said no.

Marc Randolph, one of the Netflix co-founders at the meeting, was wearing flip-flops, a T-shirt and shorts, because he and his colleagues had been on a retreat in Santa Barbara, California. The day before the meeting, Blockbuster called and asked to meet with Netflix executives in Dallas. Randolph and a few colleagues hopped on a charter flight and pitched their fledgling idea.

Blockbuster executives stared blankly at them, Randolph recalled. On the flight back to California, Randolph slouched in his chair and sighed.

“Now we’re going to have to kick their ass,” he recalled thinking on the plane.

On Tuesday afternoon in Syracuse, the former Netflix CEO urged an audience of several hundred that “anyone can innovate and dream big,” as the keynote speaker at the 2018 Upstate Unleashed Conference & Venture Ecosystem Awards. The sold-out conference was hosted by Upstate Venture Connect, a nonprofit organization focused on creating opportunities for entrepreneurs and startups to succeed.

Netflix’s soaring subscription growth helped it generate $11.6 billion revenue last year. Randolph served as its CEO until his retired in 2004.

He graduated from Hamilton College, which is about an hour outside of Syracuse, in 1980 with a degree in geology. Randolph said his fondest memories of upstate New York include the outdoors. After class, he said he’d hike the Adirondack Mountains or spend hours rock climbing in Little Falls.

He founded several companies before he and fellow Netflix co-founder settled on their big hit. The idea was not necessarily an accident or something that came from thin air, Randolph said. He said he was effectively fired from a small software company, which gave him time to brainstorm. The key to entrepreneurship, he urged the audience on Tuesday, is to look for pain. See what aspects of your life need re-engineering or improvement.

One morning, Reed Hastings heard about a new technology, now known as the DVD, being tested in a lab. He and Randolph walked into a used music store, bought a pink envelope and put a CD inside it. They sent it to Hasting’s house.

The next morning, Randolph said, Hastings held up the envelope. That’s when they realized they had a real idea worth pursuing: a DVD delivery service.

The path to what we now know as Netflix did not come without turbulence. Randolph said when he told his wife about the idea for Netflix, she looked at him and said: “That’s the stupidest thing I’ve ever heard.” Blockbuster rejected it. They built a website in six long months. On the first day, Randolph said it crashed 12 minutes in.

But he and Hastings believed deeply in what they had dreamt, and the pair rebooted the site within hours, ending Netflix day one with 130 orders. Soon, they walked away from their buy-and-sell DVD business model for one focused on rental. Netflix later made three moves that Randolph said accelerated its growth: it dropped late fees, created the “queue,” in which customers could make a list of movies they want to watch, and it charged customers one subscription fee.

“It’s not about having great ideas,” Randolph told the audience on Tuesday. “It’s about building a culture to try lots of bad ideas. Was I smart? Almost all of my ideas were bad ones. I’m not a glass half-full optimist. I’m a glass-overflowing optimist.”

After his keynote talk, Randolph was asked about how organizations can foster more inclusive, diverse climates.

“Diversity is not a superficial characteristic,” he said. “It’s not necessarily what gender you are, what color your skin is. It’s diversity of opinion, perspective. Sometimes, that comes from surprising places. Once you have it around the table, you recognize the value that brings.”

While Randolph advised others to remember to give themselves a break — he always made sure to have dinner with his wife every Tuesday at 5 p.m., for example — he took a page from Nike’s playbook, urging his audience at the Oncenter Convention Center to “just do it.”

“Everybody has an idea,” Randolph said. “I’ve never met a college student who doesn’t have a dream. But they all have these crazy things they think they need: an MBA, money, blah, blah, blah. Just start. Try something. Take the idea out of your head and start it.”

Published on October 2, 2018 at 11:49 pm

Contact Matthew: mguti100@syr.edu | @MatthewGut21