It is not necessary to have strong evidence, or even walk the scene where it happened again. Nor is it imperative to question witnesses, even if there are millions who can assure who carried it out.
Anyone who is asked who was to blame behind the end of the video stores, surely only one thing will answer: Netflix. And Reed Hastings appears as the figure behind the giant that transformed the entertainment industry, creating its own language and culture. A mathematician who appealed to data analysis to understand the public.
Born in Boston, he studied mathematics at Bowdoin College. However, before enrolling, he extended his summer job for a year, which consisted of selling vacuum cleaners at home.
After graduating with honors in the spring of 1983, he flew to Swaziland, where he dedicated himself to teaching mathematics in a school for two years with the Peace Forces, an independent federal agency of the United States that sends volunteers to 70 countries of the world and was founded by John Kennedy.
It was during that stay that he understood the true penetration that TV had in society: "While I was traveling through Africa, I saw how many people loved television. You could be in the middle of nowhere, that a television was the most precious possession."
The experience, he revealed, enriched him immensely. But the routine was too slow for what I was used to. He felt stuck. From Africa, he sent his application for access to Stanford, the university mecca for those who want to succeed in the competitive innovation market (Silicon Valley was born in its corridors). There he studied a master's degree focused on Artificial Intelligence, something that would later set the course for his future projects.
His path as an entrepreneur began shortly and successfully, since his first company, Pure Software, quickly took flight. Hastings admits that Netflix's corporate culture is influenced by the mistakes made in its first project.
At the age of four, the startup debuted on the Stock Exchange and then was acquired by Rational Software for $ 750 million. During that period he met Marc Randolph, who was responsible for the marketing area of the firm. With those millions, Hastings decided to start over from scratch, this time along with him.
The importance of storytelling
The story about the origin of Netflix has many edges and versions that mix some fantasy and reality. There is nothing that sells more than a good anecdote that graphs the solution that entrepreneurship offers.
Hastings said on numerous occasions that the ‘Newton's apple’ was the $ 40 that he was charged for returning Apollo 13 late in a video store.
However, Randolph denies it: "The story is great but it is a shortcut to tell the problem we managed to solve. We were only sure that we wanted to do something that involved e-commerce, that had a logistic leg and covered a large category, such as it was the rental of videos. "
After a test by mailing a CD to prove it was strong enough, Hastings and Randolph gave free rein to their project. In 1997, Netflix was born as an online site where people could rent or buy movie DVDs for a fixed fee.
Although the idea of incorporating subscriptions as a business model was always on the table, it was officially made official in 1999. A year later, he appealed to his métier and added personalized recommendations through the ratings that the members themselves gave to the films .
A few of having started walking, Netflix was about to be acquired by Amazon. At that time, most of the income came from sales and not from rents, and this worried the founders because they saw no future in that sector. Jeff Bezos offered them $ 14 million, but that figure didn't convince Hastings.
During the return trip they discussed how to boost the business and, without speaking, they realized that they were not ready to sell. "We agreed that Reed would reject the offer with kindness because in the future we would be better off having Amazon as a friend and not as an enemy," Randolph acknowledges.
Inside the company the weather was changing. Randolph began as the CEO, while Hastings was the top shareholder, with 70%. In 2002, the former decided to leave his executive position to look for other challenges despite the fact that the company already had more than 1 million customers.
Rivals, not enemies
While the story placed Blockbuster as Netflix's main rival (and victim), the truth is that he was not the first one he faced. Five years after the firm was born, Walmart announced the launch of its subscription service to rent DVDs.
The first reaction of the market was a collapse of the company's shares, which had carried out its IPO that same year. However, Hastings remained confident: "We know they will not be as focused as we are." In 2005, the supermarket chain changed its business and went from rental to sale.
"That time we do not celebrate but if we manage to defeat Blockbuster, then we will celebrate," said the CEO that year. Before beating him, he was preparing the way for the business that he really believed would change the industry: streaming.
As mail costs rose, Internet penetration increased, broadband connection improved and reduced its value, Netflix was investing between 1% and 2% of its revenues in this segment.
"We didn't spend a minute trying to save the DVDs," exclaimed Ted Sarandos, head of the content area. Thus, in 2007 the service was launched and from then on alliances were announced every year with the main TV, mobile and videogame platforms to popularize the platform.
According to its annual balance of 2018, the company has almost 140 million subscribers globally, with a growth of 29 million compared to the previous year. Despite the prominence that captured streaming, Netflix has about 3 million memberships to its DVDS service.
As color data, it is worth remembering the sayings of who was the executive director of Blockbuster, John Antioco: he considered that customers were going to prefer video rental stores before doing it over the internet. Therefore, he gave up buying an important stake in Netlix.
That wrong reading of reality helped the platform to snatch followers and lose its position of comfort in the segment. One of the last blows of drowning was to launch an online service called ‘Total access’, which did not have the expected success. Following CEO changes and failed strategies, Blockbuster filed for bankruptcy in 2010.
Streaming became the content's own production, which began in 2013 with the renowned House of Cards. More series arrived, in addition to licensed products, then the movies - Beasts of No Nation was the first in 2015 - and soon Netflix evolved to be one of the leading players in the entertainment industry.
Although its leadership in the video streaming market is threatened by the advance of giants such as Amazon and Disney, the company does not flinch, at least in public. Inside, cultivate a work identity that is the envy of much of the Silicon Valley ecosystem.
Hastings says he tries to create the culture in his company that the employees are the ones who make the difference. "Freedom is only one part, the other is responsibility," he says.
"The company has created a high-performance identity, and proper performance achieves a generous package of benefits," he emphasizes as mantra. Proof of this is your unlimited vacation: Hastings recommends that young CEOs memorize the first 86 pages of the Beyond Entrepreneurship book written by James Collins.
"We have to fight against the idea that, as companies get bigger, the culture gets worse," he says. "On Netflix we are much better because we have more brains thinking about the problem. If you have 1,000 really thoughtful people thinking how to improve, you can progress more than if you have only 100."
Although he appears in public confident and passionate about his own product, he avoids being arrogant: he often repeats that he is the first one surprised with the success of the business, which already represents 40% of the data traffic during peak hours in the United States.
With a fortune of $ 3.1 billion according to the Forbes ranking, Hastings announced the creation of a fund of $ 100 million to change the way children learn, through the creation of schools in which technology is fully integrated into the classrooms.
Hastings has a rule that imposes itself: get away from work at least six weeks a year. However, he points out that he does not have a remarkable hobby to occupy that free type.
He does declare himself an animal lover and his house in Santa Cruz is full of creatures, including two small goats from Nigeria. As for Netflix, he admits that he uses it "when he has some time." Ironies of the most powerful man in the "show business".
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