The Secrets To Netflix’s Success
By Anna Johnson on February 6th, 2009Fortune magazine recently included a short piece written by Neflix founder and CEO, Reed Hastings. It’s a nice little piece sure to warm your entrepreneurial soul. I encourage you to read it (see link below).
Netflix, which dominates online video rentals, had a record quarter ended December 31, 2008. It made $359.6 million in revenue – 19 percent above the $302.4 million it made in the fourth quarter of 2007 – and net income of $22.7 million – 45 percent above the $15.7 million it made last year.
And it all started back in 1999 when Reed Hastings got a $40 late fee for failing to return Apollo 13 on time!
Here are the four secrets to Netflix’s success which Reed mentions in the article:
1. Target a niche. In other words, when it comes to addressing an ‘ache’ be an ‘aspirin’ (specific solution) rather than a ‘vitamin’ (general nice-to-have).
2. Be flexible e.g. Reed called the company Netflix rather than ‘DVDs by Mail’ because he wanted the company to be prepared for other media and delivery mechanisms.
3. Never underestimate the competition. Netflix has managed to defend itself against Blockbuster, even though Blockbuster has invested $500 million into competing against Netflix.
4. There are no shortcuts. Here’s a quote:
“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.”
Source: Reed Hastings (interviewed by Alyssa Abkowitz), “How Netflix got started,” Fortune, January 28, 2009, Press Release, “Netflix Announces Q4 2008 Financial Results,” Netflix, January 26, 2009
