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