Netflix CEO Reed Hastings spoke at German Media Convention re:publica on the future of digital entertainment, but perhaps more interestingly, he shared his personal journey as a technology executive and described the thinking behind Netflix’s boldest decisions.
At around the 10-minute mark, Hastings spoke about his time as CEO of Pure Software. He twice resigned from his B2B company, only to have his resignation rejected.
In 1997, Pure Software (since merged with Atria) was acquired by Rational Software.
“It turned out to be the lucky break of a lifetime,” Hastings told the audience. He goes on to describe his love for working at a consumer-focused company rather than a business-to-business company.
His largest challenge at Netflix was defeating Blockbuster - a competitor that was 500 times larger by market cap than his movie-rental and delivery service.
Hastings describes 2004 to 2008 as “four years of brutal head-to-head battle for marketshare.”
(He chooses to leave out the well documented buying/selling dance that Netflix and Blockbuster had around the same time.)
Netflix began its streaming service in 2007, and by 2009, Blockbuster was bankrupt.
In 2010, Netflix expanded internationally for the first time.
“We went to Canada!” he exclaims to chuckles from the audience. “It was our first time without DVD – with just streaming,” Hastings explained. The success of the Canadian experiment emboldened Netflix to continue its expansion internationally – and focus exclusively on streaming. The next year, they expanded to 30 countries.
Surprisingly, he even addresses the failed Netflix brand division that would have created the mail-only brand Qwickster: “A catastrophically bad decision – and it almost killed us,” he said.
“In hindsight, we realized the same bravery that allowed us to be innovative is the bravery that almost killed us in that time – and that these things go hand in hand.”