Many of the world’s brightest minds in modern marketing will arrive at The Fess Parker next week to attend Ontrapalooza, the annual summit put on by Santa Barbara-based business automation company Ontraport. Among the speakers are Nasty Gal founder Sophia Amoruso, whose online clothing retail empire made her one of the richest women in the country, and Marc Randolph, the Santa Cruz entrepreneur who co-founded Netflix, where he served as CEO from 1997 to 2004. The latter chatted with The Independent last week, and this is a streamlined version of the conversation.
What’s your Netflix connection? Reed Hastings and I came up with the idea together. We were co-founders, and for the first year and a half, I was running the company and Reed was working on other things.
So Hasting’s story about being inspired by a $40 late charge for renting Apollo 13 isn’t true? With origin stories, most companies have very, very convoluted parentages. It’s not as if everything comes fully formed from one man’s mind. Lots and lots of people chime in with many ideas. But most people don’t want those nuanced details, so you come up with a story that shows what the reasoning of the company was. It’s like a Greek fable, in a way.
But at Ontrapalooza, I’ll be trying to give all those nuances of what really went into starting a company like Netflix, to really understand what makes a company successful.
What’s that? The first one is that the idea you start with may not be what really becomes successful. Of all the seven startups I’ve been involved with, that’s the skill: How do you stretch from one place and remain flexible and learn from mistakes and keep moving forward, even though it starts to look very different from the original idea?
How do you achieve that flexibility? The big one is developing a culture of risk. That’s not just one person being a risk-taker. It’s making it permissible for the entire company. Risk doesn’t mean scary and dangerous. It means going down a path without knowing in advance where it’s going to lead. And that’s going to happen if you are doing something that hasn’t been done before.
The second thing is setting it up so you can try lots of ideas. The successful startup is not the one which comes up with one good idea; it’s the one that is able to build a system that allows it to try lots of bad ideas. Netflix went through hundreds of iterations trying to get DVD rentals by mail to work. We eventually stumbled onto one that customers liked.
You’ve said that “relentless optimism, coupled with paranoia” is key to entrepreneurial success. Are you worried all the time?
It’s one of those things where you’re lying awake at night thinking of the 20 possible things that could go wrong and thinking through what you would do in each of those cases. Almost all of that preparation ends up being worthless, until one of those things goes wrong and you are prepared for it. Then everyone says, “How did you know which contingency to look for?” But you didn’t — you looked for them all.
Are you surprised people are still renting DVDs?
From day one, people were saying a DVD rental-by-mail company was ridiculous. Just wait, they said, it will be a matter of weeks before everyone is downloading movies. That was 20 years ago. We knew that if we founded a company based on digital delivery, we’d be waiting a long time. On the other hand, with the inevitability of moving away from DVDs, we had to build something that wasn’t going to put us in a dead end.
That was the genius behind Netflix: We positioned ourselves as delivery agnostic. And when they’re beaming movies into your telepathic helmets, we’ll deliver movies that way. It’s just founded on something very different, which is finding great entertainment.
Ontrapalooza runs October 12 to 14 at the Fess Parker Doubletree. See ontrapalooza.com for schedule and tickets, which are reduced to $297 by using the code ‘OPLZALocals’ at check-out.