The magic isn’t in the idea, it’s in the testing process, said the Netflix co-founder in an incredible podcast. And that wasn’t the only gem he shared.
“Netflix sounded a little cheesy, but it was the best we could do.”
Those were the exact words Netflix 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 back in time to when he and co-founder Reed Hastings were carpooling in the Bay Area, and every day, Marc would pitch Reed a new business idea. Some ideas weren’t so great: custom baseball bats and custom shampoo. Other ideas morphed into something much bigger: Netflix.
Marc Randolph was 38 when he started Netflix, but he had successfully launched more than five companies before that.
Here are 5 tips from the co-founder of Netflix, a company founded in 1998 that now generates more than $20.16 billion in annual revenue.
There is nothing more detrimental to aspiring entrepreneurs than sheer inaction. I can attest to this myself, having spent half of my twenties talking about starting a business, but never actually doing it.
In 2011, at a college competition, I gave a two-minute elevator pitch about a food delivery app, won second place, but did nothing about it. The entire time I worked at Google, all I did with my close friends was entertain startup ideas, but we never put them into action.
That’s why, as soon as I quit, my top priority was to finally start a project on my own. And within a year of doing so, I witnessed the greatest professional and personal growth of my life.
This is the most important advice Marc Randolph has for you: stop talking about your ideas or entertaining them in your head.
“You have to figure out how to quickly, easily and cheaply get your idea out of your head and into reality.”
Every idea you have in your head sounds like the next big thing. And the more you think about it, the bigger it gets. But here’s a reality check: It’s not. Your idea is incredibly flawed because it hasn’t been subject to outside forces yet. It has yet to solve a person’s problem.
So how do you start?
In his talk with Vishen, Marc gives an example of a college student who once approached him with the idea of building a peer-to-peer clothing rental business. His solution was pretty simple.
He asked for a pen and paper and prepared a sign that said:
“Need to borrow some clothes? Knock.”
He then told him to knock on his bedroom door and see what happens. By doing so, and within a few hours, he will be able to find out if the idea is viable or not. If someone knocks, it is.
Marc’s advice boils down to three simple steps:
Get your flawed idea out of your head and onto paper. Your idea doesn’t need to be viable, as Marc explains, “It just has to be something that stimulates what the problem is that you’re really trying to solve.”
Get over that fear that stops you from getting started. Here’s a little mental shift to help you do it.
Get busy testing your idea so you can discover its flaws. Once your idea is out in the open, as people engage with it, you begin to identify its flaws, which then allows you to reflect, reframe, and rebuild. So don’t waste time on 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. Get started!”
The goal is to learn how people will engage with your idea to determine whether your core concept is viable. And you only learn that by trying it out.
This second lesson is why Marc’s number one piece of advice for aspiring entrepreneurs is to simply get started; because once you do, you’ll realize that the magic isn’t in your idea, but in your testing process.
“It’s not about having good ideas. It’s about the system, the process and the culture to try a lot of bad ones.”
That is exactly why James Clear has become so famous for saying that “You don’t rise to the level of your goals. You fall to the level of your systems.” Likewise, in entrepreneurship, you don’t 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 are only as good as your systems and processes. And that is exactly why in my second venture into building a writing business, the first thing I did was build myself a system that would allow me to achieve my goals.
In a fast-moving world, you need to move faster.
Find a cheap, fast, and smart way to create systems that allow you to test and retest your ideas continuously. As Marc explains: “The trick is not to have the idea. The trick is how quickly, cheaply, easily and cleverly you can find a way to take an idea and test it.
This lesson is short and sweet, but its implications are profound. When asked about Netflix’s culture, Marc responded 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 treat yourself, your co-founder, employees, and 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 can’t hear what you say.”
It’s really simple. Say what you’re going to do and be accountable for it.
Marc shares the story of how long before Netflix became an online streaming service, they weren’t just renting DVDs, they were selling them too. And at one point, 90% of their revenue came from DVD sales.
It was there that the founders found themselves at a point of union.
They knew it was only a matter of time before other companies started 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 selling DVDs was distracting them from fully concentrating on their core model of earning rental rights.
The question was: “Where do you go from here?”
Do you focus on what pays your salary and generates 90% of your income? Or do you focus on the ultimate long-term goal of the business: the rental service (even if it shows no signs of working)?
Well, I guess you know what happened next.
They said they agreed. So they walked away from DVD sales entirely, cut 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, frankly, you’re more interested in betting on what could be a huge success, rather than taking the safe path to mediocrity or, more likely, failure.”
If you want to succeed in entrepreneurship, you have to be willing to do two things. First, you have to choose your sacrifices. Second, you have to always play the long game. How? You focus on one thing and do that one thing well. Why? Because doing too many things slows you down.
“It’s very difficult, but fundamentally, one of the most difficult decisions you will have to make is what you are not going to do.”
The biggest mistake I made in my first entrepreneurial venture was that I had no focus. I launched an e-commerce store offering plastic-free products, but I didn’t focus on one product or try to validate the next. I wanted to sell everything to everyone, so I expanded too prematurely, too enthusiastically, and too quickly. An amateur mistake, until I came across this Russian proverb:
“If you chase two rabbits, you’ll catch neither.”
Get into the habit of thinking long-term and focusing on one thing and becoming great at it before you consider branching out to something else. And here’s a tip shared by Marc that can help you get 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.
As the conversation came to an end, Vishen asked Marc this question: «What is your greatest passion right now?»
His answer will surprise you:
“From the beginning, my big focus has been balance. Since I was in my twenties, I learned, and realized, that I wasn’t a complete person if I worked all the time.”
He explains how every Tuesday he is 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?” Marc continues, “It’s about mastering balance.” Every weekend, month-end, and year-end, he looks back to reflect on his progress and answer the question, “How did I do?”
Manage your energy first because what good can you do if you are totally exhausted?
Trust me when I say this, burnout will break you. It took 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 a wall.
That’s when I decided I was done; I deleted the word rush from my dictionary and replaced it with «slow living and conscious consistency». I slowed down, put my health first, and created more balance in my life.
So make a vow to 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 just say you want to live a balanced life. Commit to it and live it.
Answer this question: “What makes me complete?”
So go and make time for it. For what matters to you.
In the previous lessons, Marc Randolph bestows upon us his brilliant wisdom:
- Never leave an idea in your head, start now and start little by little.
- Build systems that facilitate a continuous testing process.
- Remember that culture is what you do, not what you say.
- Focus on one thing (your core competency), be good at it, and always play the long game.
- Prioritize balance in your life so you can stay whole and happy.
All of the above are great lessons, but the one below towers above them all. As the Netflix co-founder explained the importance of finding balance, he said:
“You can’t make business success the metric of success in your life.”
There is much more to life than business.
As you walk the path of entrepreneurship, never forget to count your blessings or be 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.
