'That Will Never Work'

A phrase that changed Netflix's path to success!!

That will never work,

You are going in the wrong direction,

Your thoughts have no basis- Give me numbers,

Are you really sure you want to do this?

Why do you want to try out, settle in the career the way you have been!!

All these phrases sound familiar and often heard in Indian society despite the efforts taken by the government to boost the startup culture in India. I agree that the culture is driven by ideas and is slow in progression. But does this mean that it can’t happen?

What if the supporter and survivor of our days and nights, our reason to chill during this quarantine, ‘The Netflix,’ have thought the same and kept its ideas closed to him? Ideas and opportunities keep coming and going; what is essential is how seriously you take them and how far you want to reach with that core idea, irrespective of the apprehensions and challenges you face along the way.

My recent read of ‘That Will Never Work’ by Marc Randolph, the co-founder of Netflix and the sole reason behind the idea, gave me goosebumps. The way he has defined his idea planned his actions, and executed them is beyond the league. When he planned to start this company, he was having a stable life and a great career that he chose to forego and take the risky path.

Few highlights from the book left their imprints on me regarding his moves and motives behind those strategies, which hold relevance in the current times. These can be reapplied in different situations by a marketer:

1. Managed disruption Vs. Instant gratification

• Managed disruption: A planned way or a designed roadmap to bring about differentiation in customer service, done by carving out strategies based on consumer insights

• Another side is instant gratification that captivates the essence of building a new customer experience giving them a fulfilled service in a unique way. Given the example of Netflix from the book, when they want to develop a seamless DVD renting process, they tried to make the exchange queue in two days, which was further eased out with unlimited numbers of orders at one go. The idea behind it was to ensure that customers always have a deck of DVDs lying the top of customer’s shelves so that they still have the opportunity to select and make a choice concerning their mood. This move gave them the freedom to choose through their variety, which is what happens when you enter a DVD store.

• Relate it to the current e-commerce sites, or a cold war picked up by Amazon and Flipkart where Amazon played well through their logistics capability and serving Prime customers with same day/one-day delivery making customers loyal to their site and also give them a sense of quickness and speed of demand fulfillment.

2. Subscription Vs. Usage and Removing unit price concept from a product

• Lowering product price is a sure way to gain market share/leadership, provided product differentiation is not an option

• Unit price is a short-term concept of getting customers on board, but the real idea would be offering a service that reduces the cost and avoids a price war keeps the customers base intact for a long time. Customer loyalty is built over time due to the service model you have encircled the customer in

• Until Netflix, DVD renting was a product-based model where shops focussed on providing new releases in real-time and fulfilling customer demand. Still, Marc converted it into a service-backed model. He offered a subscription model with cycles to rent DVDs and also provide suggestions based on recent purchases and reviews

• Interesting to note that while Netflix was launched in India — a similar subscription model was executed by the team which initiated operations by giving a one-month free trial to gaining customer traction as customers found the platform secure, accessible, and with a vast content database

3. “ Nobody knows Nothing”

• A beautiful way to describe a person to trust your gut instinct and visualize the trend before getting into a domain

• We start by believing in our idea, testing the plan and pilot run, and give that idea a shot without bothering ourselves with the success and failure quotient.

• Another mind imprinting excerpt details that it’s always great to discuss the plan with people you find comfortable with, take their views, go around talking the idea with industry runners and assess how useful your purpose is to the customers. IT gives a pre-check and emotionally detaches you from your plan and helps develop better clarity of thoughts. “Just to convince Reed for this DVD idea, Marc sent a demo DVD to his address with a hope that it reaches safely and in time to his place.”

• Startups these days have shifted the focus from transforming the idea into a business. Instead, they focus on getting a feasible idea, getting funding, and selling it off shortly. VCs have repeatedly been iterating that the concept is only a business idea if it fulfills consumer demand and can provide a positive return on investment in the future. Sequoia Capital Head has recently stressed that viable unit economics is the new norm that describes the time period when the startup will be break-even and able to drive profits in the future.

4. The benefit of Retail Collaborations! Retail capability Vs. the Market Leader

• The market leadership concept of capturing the market is always an easy way out if you get such an opportunity. We think that it will be our best shot if we collaborate with the leader, then others would be easily tapped, and with this overwhelmed thought; we don’t realize the compromise we make

• It’s time to understand the consequences properly, prepare a complete cost-benefit analysis and also determine the pros and cons of such an act to your brand per see

• Taking the example of Toshiba vs. Sony in Netflix’s case, the Sony tie-up was surely a big one, but it was a loss-making initiative in two ways. Netflix ruined relationships with Toshiba, and second- the deal put in by Sony was nowhere helping Netflix directly in their near future.

• This example works as an eye-opener for future marketers to rethink and redefine the goal clearly and then look out for the need for fulfillment and propose how it can be done. It may not be the case that every time the best option is best for you at the need of the hour.

5. Freedom vs. Responsibility

• The comparison is more from an organization’s cultural perspective regarding what factors should be focussed on when you decide to build an organization.

• Flexible working hours are the new norm, but that goes somewhere missing in the pre-COVID era as bosses are less likely to trust their teammates, but what they lack to see is the efficiency of each member. Work quality depends on the energy and readiness of the employee and not on time spent by them for the work.

• Providing freedom to the employees gives them a sense of belongingness and responsibility towards their work as they go hand in hand no matter how and from where they complete the job and remain updated. Every employee has the right to choose their comfortable space when focusing on work-life balance, or personal life is demanding more attention than work sometimes.

• Another critical factor often neglected is the ‘Focus’ on work and things that you want to build in the future, which encompasses your activities and a close look at the competitors and industry movements from time to time.

6. Consumer behavior is becoming more frugal and value-conscious than just being a part of the herd. We would get to see such cases more in the future in the Post-COVID era, where luxury and overhead expenses will see a sharp cut because of limited wallet size. Another expected effect is creating options in terms of convenience and cost-effective models to help consumers fulfill the demands.

7. Marc, through this book, has focussed on an outlook which he has lived through his life and also end up leaving Netflix after its successful IPO- this thought was looking for doing meaningful things and building camaraderie in the teams. As long as he felt that his skills had done enough to stand the Netflix where it was in 2002, he bid farewell to the company and his position. This gesture was overwhelming to notice from a co-founder. In a typical scenario, they get attached to the idea. When the company runs in profit, they tend to get more emotionally attached. His clarity and a clear goal of helping and providing his services as needed was a driving factor that made him move ahead in that time and create inspiration for future MDs and CEOs.

What are your thoughts? Drop a comment to share your views. And if you like this book review, then drop us the suggestions we should bring next blog on!