hi I’m Evan Carmichael welcome to
another edition of modeling the masters
I believe that the fastest and most
effective way to grow a business is to
model the strategies that people who
have already done what you’re trying to
do so today we’re gonna look at how a
Peace Corps volunteer and teacher quit
his job when at the age of 48 started in
his own business in a movie rental
business and went on to build a company
to have over 23 million customers this
is the story of Netflix founder Reed
Hastings and the top three lessons you
can learn from his success Reed Hastings
is an American entrepreneur and the
founder of Netflix he used to teach
mathematics in swaziland is an American
Peace Corps volunteer so when the 48
year old Reed Hastings decided to found
his own software company some eyebrows
were raised but Hastings would prove the
disbelievers wrong with the subsequent
founding of Netflix the largest movie
rental service via mail in the US with
over 23 million subscribers and sales in
the billions
Hastings proved he was able to go from
living in Africa to living in affluence
his scenes father was a prominent lawyer
who once worked in the US Department of
Health and education and welfare in the
Nixon administration after graduating
with his bachelor’s degree and winning
awards to his mathematics abilities
Hastings felt the urge to join the
Marine Corps he signed up for their
platoon leader class and spent two years
in their boot camp in Virginia in 1983
Hastings found himself in Swaziland
working as a mathematics professor for
the Peace Corps he stayed there for two
years before deciding to return home
back in the US Hastings was accepted
into graduate school at Stanford his
forces first choice had been MIT but he
didn’t get accepted
Hastings graduate from Stanford with a
master’s degree in computer science in
1988 and was subsequently hired by
adaptive technology where he worked on
developing a debugging software tool but
Hastings wanted more of a challenge and
he wanted to work for himself
Hastings decided the only option was a
set off on his own business and in 1991
Hastings quit his job launched pure
software a company dedicated to
developing troubleshooting products
software but as a company group hastens
found in his mathematics and computer
background were not enough of a match
for running the business he asked his
company’s board of directors to replace
him for the good of the company after
finally selling the business he would
wig two years before trying again in
1998 Hastings founded Netflix as a movie
rental by mail service that offered a
flat rate subscription fee within five
years
the business was booming action item
number one changed the model one of the
best ways to disrupt original industries
this had changed the business model many
markets have established companies who
rely on their name and their history to
stay at the top
they don’t innovate or launch new
products or services they do things
because that’s the way we always do it
often these industries are perfect
targets or tech savvy entrepreneurs who
have a new approach and want to shake up
the market by changing the model
Hastings was embarrassed when he had to
pay a large video late fee and was
afraid to tell his wife he had made the
mistake he was going to the gym
it was frustrated and thinking that he
could not believe that he was
threatening the integrity of his
marriage over something so trivial
that’s when he came up with a different
model Netflix was born as a way people
could play a fad a flat fee each month
and keep the video for as long as they
wanted without having to pay a late fee
uncertain this idea would work he
decided to get nothing to loose he seems
dared to change his company’s business
model not knowing what the results would
be once he realized he had hit the nail
on the head however Hastings shifted all
his attention to promoting this new
model he knew there could be no going
back and forth if it was going to make
the subscriptions work it had to be the
only service he offered according to
Hastings on my way to the gym I realized
they had a much better business model
you could pay $30 or $40 a month I work
out as little or as much as he wanted
early on the first concept we launched
was rental by mail but it wasn’t
subscription-based so it worked more
like blockbuster we said let’s try the
more radical subscription idea we knew
wouldn’t be terrible but we didn’t know
if it would be great
action item number two don’t
underestimate the competition when I was
in the venture capital business one of
the biggest mistakes many of the
entrepreneurs made in their pitch to us
was saying that there wasn’t any
competition or assuming that the
competition wouldn’t react to what they
were proposing you always have
competition and if you’re hurting their
business they will react acknowledge
this and plan for it it’ll increase the
chances that people find in your company
and also make you a better business
person Netflix has grown to become the
largest movie rental by mail service in
the US but its path to success has not
been without hiccups indeed Hastings
admits that one of the biggest mistakes
came in under estimating the capacity
and strategy of his competition
Hastings first learned that lesson in
2002 when he admits that if he could do
one thing over again it would be going
public later than he did
blockbuster got a chance to see the
finance reports and would go after their
business two years later the patients
would have waited Netflix would be a lot
bigger than it is
according to Hastings we were in public
in 2002 and by publishing our financials
we let blockbusters see that this was a
profitable business we thought well they
won’t put much money behind it over the
past four years they’ve invested more
than five hundred million dollars
against us the most difficult thing is
anticipating the threats ahead of time
fear because we’re fighting Walmart
which is the world’s largest company and
blockbuster which is bigger than us
action atom number three work hard while
in success is a great way to quickly
propel your company forward but you
still have to work hard any successful
entrepreneur will tell you that they
poured their heart and soul into their
business they work days nights weekends
and holidays to get their companies off
the ground it helps to work smart by
modeling what other successful people
have done but you still have to work
hard Hastings may be enjoying his
success now but it’s only result as of
years of hard work trial and error and
lots of mistakes made and lessons
learned but he was able to keep going
because he knew that growing a
successful business meant adopting a
long term perspective
every move that he took Hastings was
looking at least a few years ahead he
was able to make some of the risk your
decisions precisely because he was not
looking for immediate payoffs
he was confident that his business would
be around in the long term this
confidence grew from Hastings knowing
that he had a winning business model on
his hands he had the convenience of a
mail-order video rental system and he
knew he could supply more selection and
value to people than his competitors
according the Hastings occasionally
great wealth is created in a short
amount of time but it’s through a lot of
luck in those situations you just have
to think of building an organization as
a lot of work it may or may not turn
into great wealth most good management
isn’t day to day it’s a lot of
investment in things say over the next
two years investments in a relationship
in management think of a great business
model as a triad of convenience
selection and value relative to what
people are used to you nee allall three
then you take off even though Hastings
grew up in a well-to-do family and
attended private school he spent a few
years working for the Peace Corps and
teaching in Swaziland after returning to
United States who would eventually moved
to California unknown to most people
Hastings became very active in
educational philanthropy who would
advocate stronger math and science
curriculum as well as advocate increase
in the number of charter schools which
he believed were better than public
schools in an effort to change the way
public schools did business Hastings
would organize a drive to get a new
proposal on the California ballot during
the 2000 election proposition 39 would
go on the ballot but to show his support
for education Hastings would go back to
school to get his graduate degree in
education this showed all the residents
that he was serious about education and
proposition 39 would eventually be
passed by large majority of residents
thank you for joining me for another
edition of Molyneux masters if you liked
the video and you want to see more
please give it a thumbs up below I’d
also love to hear what you have to think
if you want to leave a comment under the
video and stay tuned for the next
episode
you
another edition of modeling the masters
I believe that the fastest and most
effective way to grow a business is to
model the strategies that people who
have already done what you’re trying to
do so today we’re gonna look at how a
Peace Corps volunteer and teacher quit
his job when at the age of 48 started in
his own business in a movie rental
business and went on to build a company
to have over 23 million customers this
is the story of Netflix founder Reed
Hastings and the top three lessons you
can learn from his success Reed Hastings
is an American entrepreneur and the
founder of Netflix he used to teach
mathematics in swaziland is an American
Peace Corps volunteer so when the 48
year old Reed Hastings decided to found
his own software company some eyebrows
were raised but Hastings would prove the
disbelievers wrong with the subsequent
founding of Netflix the largest movie
rental service via mail in the US with
over 23 million subscribers and sales in
the billions
Hastings proved he was able to go from
living in Africa to living in affluence
his scenes father was a prominent lawyer
who once worked in the US Department of
Health and education and welfare in the
Nixon administration after graduating
with his bachelor’s degree and winning
awards to his mathematics abilities
Hastings felt the urge to join the
Marine Corps he signed up for their
platoon leader class and spent two years
in their boot camp in Virginia in 1983
Hastings found himself in Swaziland
working as a mathematics professor for
the Peace Corps he stayed there for two
years before deciding to return home
back in the US Hastings was accepted
into graduate school at Stanford his
forces first choice had been MIT but he
didn’t get accepted
Hastings graduate from Stanford with a
master’s degree in computer science in
1988 and was subsequently hired by
adaptive technology where he worked on
developing a debugging software tool but
Hastings wanted more of a challenge and
he wanted to work for himself
Hastings decided the only option was a
set off on his own business and in 1991
Hastings quit his job launched pure
software a company dedicated to
developing troubleshooting products
software but as a company group hastens
found in his mathematics and computer
background were not enough of a match
for running the business he asked his
company’s board of directors to replace
him for the good of the company after
finally selling the business he would
wig two years before trying again in
1998 Hastings founded Netflix as a movie
rental by mail service that offered a
flat rate subscription fee within five
years
the business was booming action item
number one changed the model one of the
best ways to disrupt original industries
this had changed the business model many
markets have established companies who
rely on their name and their history to
stay at the top
they don’t innovate or launch new
products or services they do things
because that’s the way we always do it
often these industries are perfect
targets or tech savvy entrepreneurs who
have a new approach and want to shake up
the market by changing the model
Hastings was embarrassed when he had to
pay a large video late fee and was
afraid to tell his wife he had made the
mistake he was going to the gym
it was frustrated and thinking that he
could not believe that he was
threatening the integrity of his
marriage over something so trivial
that’s when he came up with a different
model Netflix was born as a way people
could play a fad a flat fee each month
and keep the video for as long as they
wanted without having to pay a late fee
uncertain this idea would work he
decided to get nothing to loose he seems
dared to change his company’s business
model not knowing what the results would
be once he realized he had hit the nail
on the head however Hastings shifted all
his attention to promoting this new
model he knew there could be no going
back and forth if it was going to make
the subscriptions work it had to be the
only service he offered according to
Hastings on my way to the gym I realized
they had a much better business model
you could pay $30 or $40 a month I work
out as little or as much as he wanted
early on the first concept we launched
was rental by mail but it wasn’t
subscription-based so it worked more
like blockbuster we said let’s try the
more radical subscription idea we knew
wouldn’t be terrible but we didn’t know
if it would be great
action item number two don’t
underestimate the competition when I was
in the venture capital business one of
the biggest mistakes many of the
entrepreneurs made in their pitch to us
was saying that there wasn’t any
competition or assuming that the
competition wouldn’t react to what they
were proposing you always have
competition and if you’re hurting their
business they will react acknowledge
this and plan for it it’ll increase the
chances that people find in your company
and also make you a better business
person Netflix has grown to become the
largest movie rental by mail service in
the US but its path to success has not
been without hiccups indeed Hastings
admits that one of the biggest mistakes
came in under estimating the capacity
and strategy of his competition
Hastings first learned that lesson in
2002 when he admits that if he could do
one thing over again it would be going
public later than he did
blockbuster got a chance to see the
finance reports and would go after their
business two years later the patients
would have waited Netflix would be a lot
bigger than it is
according to Hastings we were in public
in 2002 and by publishing our financials
we let blockbusters see that this was a
profitable business we thought well they
won’t put much money behind it over the
past four years they’ve invested more
than five hundred million dollars
against us the most difficult thing is
anticipating the threats ahead of time
fear because we’re fighting Walmart
which is the world’s largest company and
blockbuster which is bigger than us
action atom number three work hard while
in success is a great way to quickly
propel your company forward but you
still have to work hard any successful
entrepreneur will tell you that they
poured their heart and soul into their
business they work days nights weekends
and holidays to get their companies off
the ground it helps to work smart by
modeling what other successful people
have done but you still have to work
hard Hastings may be enjoying his
success now but it’s only result as of
years of hard work trial and error and
lots of mistakes made and lessons
learned but he was able to keep going
because he knew that growing a
successful business meant adopting a
long term perspective
every move that he took Hastings was
looking at least a few years ahead he
was able to make some of the risk your
decisions precisely because he was not
looking for immediate payoffs
he was confident that his business would
be around in the long term this
confidence grew from Hastings knowing
that he had a winning business model on
his hands he had the convenience of a
mail-order video rental system and he
knew he could supply more selection and
value to people than his competitors
according the Hastings occasionally
great wealth is created in a short
amount of time but it’s through a lot of
luck in those situations you just have
to think of building an organization as
a lot of work it may or may not turn
into great wealth most good management
isn’t day to day it’s a lot of
investment in things say over the next
two years investments in a relationship
in management think of a great business
model as a triad of convenience
selection and value relative to what
people are used to you nee allall three
then you take off even though Hastings
grew up in a well-to-do family and
attended private school he spent a few
years working for the Peace Corps and
teaching in Swaziland after returning to
United States who would eventually moved
to California unknown to most people
Hastings became very active in
educational philanthropy who would
advocate stronger math and science
curriculum as well as advocate increase
in the number of charter schools which
he believed were better than public
schools in an effort to change the way
public schools did business Hastings
would organize a drive to get a new
proposal on the California ballot during
the 2000 election proposition 39 would
go on the ballot but to show his support
for education Hastings would go back to
school to get his graduate degree in
education this showed all the residents
that he was serious about education and
proposition 39 would eventually be
passed by large majority of residents
thank you for joining me for another
edition of Molyneux masters if you liked
the video and you want to see more
please give it a thumbs up below I’d
also love to hear what you have to think
if you want to leave a comment under the
video and stay tuned for the next
episode
you
Please follow and like us: