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Netflix’s Co-Founder Has 5 Pieces of Advice For Aspiring Entrepreneurs

#2. The magic lies not in the idea, it lies in the testing process.


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Omar Itani

3 years ago | 9 min read

“Netflix sounded a little porny, but it was the best we could do.”

Those were the exact words Netflix’s Co-founder, Marc Randolph, used to answer the question of how they came up with the name Netflix.

In a recent podcast interview with Mindvalley’s Vishen Lakhiani, Marc shared with us the story behind how Netflix went from concept to company.

He traveled way back in time to when he and his eventual co-founder Reed Hastings would carpool in the Bay area and, every day, Marc would pitch Reed a new business idea. Some ideas were not so great — customized baseball bats and customized shampoo. Other ideas transformed into something much greater — Netflix.

Marc Randolph was 38 years old when he started Netflix, but he had successfully launched over five ventures beforehand.

Here are 5 pieces of advice from the co-founder of Netflix, a company founded in 1998, that is now generating over 20.16 billion USD in annual revenue.

1. Start now and start small; never leave an idea in your head.

There’s nothing more damaging to aspiring entrepreneurs than mere inaction. I can attest to this myself as I spent the entirety of my mid-twenties talking about starting a business, but I never did.

In 2011, at a university competition, I delivered a two-minute elevator pitch about a food-delivery app, won second place, but I did nothing about it. All throughout my time working at Google, all I did with my close friends was entertain start-up ideas, but we never put them in action.

That’s why, as soon as I resigned, my single top priority was to finally start a project on my own. And within one year of doing so, I witnessed the greatest professional and personal growth in my life.

Here’s the single most important advice Marc Randolph has for you: Stop talking about your ideas or entertaining them in your head.

Stop talking and start doing.

“You have to figure out how to quickly, easily, and cheaply get your idea out of your head and collide it with reality.”

Every idea you have in your head sounds like the next big thing. And the more you think about it, the bigger it becomes. But here’s a reality check: It isn’t. Your idea is incredibly flawed because it has yet to be subject to outside forces. It has yet to solve a person’s problem.

So how do you start?

In his chat with Vishen, Marc gives an example of a university student who once approached him with the idea to build a peer-to-peer clothing-rental business. His solution was quite simple.

He asked her for a pen and a piece of paper and prepared a sign that read:

“Need to borrow clothes? Knock.”

He then told her to slap it on her dorm-room door and see what happens. Just by doing so, and within a few hours, she’ll be able to find out whether or not the idea is viable. If someone knocks, it is.

How to apply this:

Marc’s advice comes down to three simple steps:

  1. Get your flawed idea out of your head and put it on paper. Your idea doesn't need to be viable, as Marc explains, “it just needs to be something that stimulates what the problem is you’re really trying to solve.”
  2. Get over that fear that keeps you from starting. Here’s one small mental shift to help you do so.
  3. Get busy testing your idea so you can figure out the flaws in it. Once your idea is in public, as people engage with it, you begin to identify the flaws in it, which then allows you to reflect, reformulate, and rebuild. So don’t get lost in the branding just yet, prioritize shipping your product so you can further explore the validity of the problem it solves.
“It’s a way to get started. If you’re waiting to hire someone, you’re wasting your time. If you’re waiting to complete some education, you’re wasting your time. If you’re waiting to raise money, you’re wasting your time. Start!”

Your objective is to learn how people will engage with your idea to determine whether your core concept is viable. And you only learn so by testing it.

2. The magic lies not in the idea, it lies in the testing process.

This second lesson is the reason why Marc’s number one piece of advice for aspiring entrepreneurs is to just start; because once you do, you’ll come to realize that the magic does not lie in your idea, it lies in your testing process.

“It’s not about having good ideas. It’s about the system, the process, and culture for testing lots of bad ones.”

Implementation is everything.

That’s exactly why James Clear has become so famous for saying that “you do not rise to the level of your goals. You fall to the level of your systems.” Likewise, in entrepreneurship, you do not rise to the level of your ideas, you fall to the level of your systems.

This is another lesson I learned in my first year of entrepreneurship: You’re only as good as your systems and processes. And that’s exactly why in my second venture of building a writing business, the first thing I did was build myself a writing system that would allow me to rise to the level of my goals.

How to apply this:

In a fast-moving world, you need to move faster.

Find a cheap, quick, and clever way to build systems that would allow you to continually test and retest your ideas. As Marc explains: “The trick is not having the idea. The trick is how quickly and how cheaply and how easily and how cleverly you can figure out a way to take an idea and test it.”

3. Culture is not what you say, it’s what you do.

This lesson is short and simple, but it’s implications are profound. When asked about Netflix’s culture, Marc replied with this:

“Culture is not what you say. Culture is what you do.”

It’s not about your aspirations or inspirations, it’s about how you behave. How you carry yourself. How you treat yourself, your co-founder, your employees, and your customers. Stop talking about your principles, start modeling them.

In essence, Marc’s words echo what Ralph Waldo Emerson, one of my favorite thinkers, wrote decades ago: “What you do speaks so loudly that I cannot hear what you say.”

How to apply this:

It’s really simple. Say what you’re going to do and be accountable for it.

4. Think long-term by focusing on what not do to today.

Marc shares the story of how long before Netflix became an online streaming service, they not only rented DVDs, they also sold them. And, at one point in time, 90% of their revenues came from selling DVDs.

It was there when the founders found themselves at a junction point.

They knew that it was just a matter of time before other companies would start selling DVDs, which would transform their business into a commodity-based model and thus reduce their margins. They also realized that their recent focus on DVD sales was distracting them from fully focusing on their core model of attaining rental rights.

The question was: “Where do you go from here?”

Do you focus on what’s paying your salary and driving 90% of your revenue? Or do you focus on the ultimate long-term goal of the business — the rental service (even if it’s showing no signs that it’s working)?

Well, I guess you know what happened next.

They said they were all in. So they walked away entirely from selling DVDs, slashed 90% of their business, and focused solely on growing their rental model. And the rest, as they say, is history.

“That’s the nature of being an entrepreneur. You’re prepared, and more interested frankly, in taking the long-shot at what could be a big success, rather than taking the safe route toward mediocrity, or more likely, failure.”

How to apply this:

If you want to succeed in entrepreneurship, you must be willing to do two things. First, you must choose your sacrifices. Second, you must always play the long-game. How? You focus on one thing and get that one thing right. Why? Because doing too many things slows you down.

“It’s really hard, but fundamentally, one of the hardest decisions you’re going to ever have to make is what you’re not going to do.”

The biggest mistake I made in my first entrepreneurial venture was that I had no focus. I launched an eCommerce store that offers plastic-free products, but I didn’t focus on one product or try to validate the next one. I wanted to sell everything to everyone, so I expanded too prematurely, too enthusiastically, and too quickly. An amateur’s mistake, until I landed on this Russian Proverb:

“If you chase two rabbits, you will not catch either one.”

Make it a habit to think long-term and to focus on one thing and become great at it before considering expanding into something else. And here’s a tip shared by Marc that can get you started: For every meeting that revolves around what you’re thinking about doing next, start that meeting with a discussion about what you’re going to stop doing first.

5. Find balance, or you will crash.

As the conversation came to an end, Vishen asked Marc this question:

“What’s your biggest passion right now?”

His answer will shock you:

“From the very beginning, my big focus has been on balance. Since I was in my twenties, I’ve learned — and it dawned on me — that I was not a whole person if I was working all the time.”

He explains how every Tuesday he steps out the door at 5.00 pm sharp to have dinner with his wife. And how he regularly goes mountain biking and cross-country skiing. He does what makes him whole and happy.

“So, what am I interested in?” continues Marc, “It’s mastering balance.” Every end of the week, end of the month, and end of the year, he looks back to reflect on his progress and answer the question of “how did I do?”

How to apply this:

Manage your energy first because what good can you do if you’re totally exhausted?

Trust me, when I say this, burnout will break you. It took me less than six months of constant hustle, non-stop work, sleepless nights, zero social life, and an exuberant amount of overthinking for me to hit the wall crashing.

That was when I decided that I was done; I removed the word hustle from my dictionary and replaced it with ‘slow living and mindful consistency.’ I slowed down, put my health first, and created more balance in my life.

So make a vow with yourself to create balance in your life. Identify what balance means to you and what it looks like in your life. And once you do, embody it. As explained before, culture is what you do, not what you say. So don’t say you want to live a balanced life. Commit to one and live it.

Answer this question:

“What makes me whole?”

Then go and make time for it.

What Matters to You

In the lessons above, Marc Randolph bestows on us his brilliant wisdom:

  1. Never leave an idea in your head — start now and start small.
  2. Build systems that facilitate a continuous testing process.
  3. Remember that culture is what you do, not what you say.
  4. Focus on one thing (your core competency), get good at it, and always play the long-game.
  5. Prioritize balance in your life so you can stay whole and happy.

All the above are great lessons, but the one below rises above all. As Marc was explaining the importance of finding balance, he said the following:

“You can’t have business success be the metric of success in your life.”

There’s much more to life than business.

As you walk the path of entrepreneurship, never forget to count your blessings or stay mindful of what matters most in life: The gift of being alive, your relationships with family and close friends, and the appreciation for the free beauty that lives all around you in nature.


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Omar Itani

Writer (https://www.omaritani.com/)


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