Podcast

Learning Mistakes: Lessons From Netflix, Redbox, And MoviePass With Mitch Lowe

Entrepreneurship is about learning from your past mistakes to find future success. Running a startup is a learning process. You can have the idea or the solution to a problem, but you need to understand the market. Mitch Lowe did all of that. He ran video stores in the 1980s and 1990s before he cofounded Netflix. He then left Netflix to create a DVD kiosk business called Redbox. And after finding great success, he became the CEO of MoviePass which influenced the trajectory of the business of movie theatrical exhibition. Now, he is teaching other entrepreneurs on how to simplify their businesses. He is helping them create winning product ideas with intuition, perseverance, analytical thinking, and love. Join Dr. Patty Ann Tublin as she talks to Mitch Lowe (https://www.mitchlowe.net/), the co-founding executive of Netflix, former CEO of MoviePass, and former President of Redbox. They talk about the lessons you learn as an entrepreneur and how you should run a business in this day and age.

Bullets:

Co-founding executive of Netflix
Brand new book: Watch and Learn (Sept 2022)
Never graduated from high school.
After Netflix he became an executive at McDonald’s
Then created Redbox, a DVD kiosk – became 3rd largest rental company in America – 35,000 locations & $1.5 billion in revenue
Became CEO of MoviePass (grew to 3 million subscribers in 8 months)
Now uses his experience growing successful startups to teach entrepreneurs how to simplify their business.

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Listen to the podcast here

Learning Mistakes: Lessons From From Netflix, Redbox, And MoviePass With Mitch Lowe

Welcome to this episode of the show. Since I know you are going to love this interview, make sure you like, comment, share and subscribe to the show. In this episode, I have an incredible man. As I was learning about him, honestly, I could not get enough of this guy. He has the same first name as my husband but that’s not the only reason why I adore him. He is a rabble-rouser and a disruptor. He is the reason why we’re not taking a horse to work anymore because he creates a vision and makes it come to life. That means he’s not your regular cat. He’s cut from a different cloth.

I’ll give you a little bit of information about this guest and then I will let him share with you all his pearls of wisdom from what he’s learned and what he didn’t learn so well. Mitch Lowe was one of the Cofounders of none other than Netflix, involved with Redbox and McDonald’s corp and was the CEO of MoviePass. Before I go on, I want to make sure that you buckle up because Mitch Lowe is about to take us for a ride. Welcome, Mitch. Thank you so much for your time.

Thank you very much. I’m thrilled to be here.

As I told you a little bit before we got started, I like to be a little bit unconventional. I’m not going to ask you how you got here and give me the history of your career. This is what our audience and I would love to know. You are known as the guy that says, “I’ll figure it out.” Help us understand how that defined your success, maybe not such great successes in business and run with it wherever you want it to go. I love that. People say to me, “How are you going to do it?” I’m like, “I have no idea but I’ll figure it out.”

It defines the things that have gone well for me and the things that haven’t gone well. When I look back and think about this aspect of my life and how I approach things, unfortunately, I don’t ever do pros and cons. I remember Marc Randolph and Reed asked me, “Do you think we could mail DVDs to the US post office?”

In case the audience had a brain fart, Reed and Marc were the other cofounders of Netflix.

That’s correct. It was Marc’s idea to figure out how you could build a business using the US post office that eventually would become a streaming giant. In those days, no one knew whether it would be streaming or downloading. People asked me, “Could you do this?” In this case, Marc was curious whether you could mail a DVD using the US post office and it survived.

Without thinking about it, I was thinking about what the end goal would be and that was to successfully mail a movie using a first-class postage stamp. My answer was, “It works,” with no knowledge at all. None of us knew at the time that first-class postage in the US goes over a metal roller about 8 inches in diameter and bends the mail around it.

How did you figure that out?

Ultimately, what ended up happening is we went to the studios and the manufacturers of the disk. One of the coolest rooms in the early days of Netflix was this room where we made these rollers look like the post office after we found out that this is what happened. We would put a DVD over the top in an envelope and tie it down with weights to show what would happen when it bent. They almost all snapped in half. They broke.

TTD 37 Mitch | Learning From Mistakes — Learning From Mistakes: Could you mail a DVD using the US post office and it actually survived? Yes, you can but the DVDs shouldn’t have the typical silkscreen title of the movie otherwise, they won’t survive.

Over some experiments, we found the ones without the title on the one side that said the name of the movie, the studio and so on did not break. In the end, the solution was to go to the studios and say, “For the DVDs you give to Netflix, don’t put the title of the movie. Don’t do that silk screen that you do on typical DVDs to say the title and so on. Do a tiny H on the hub.”

You found that those that do not have a smooth surface would survive the metal bend. What did you need to do?

Almost every problem has a solution. I’ve come to the conclusion that it’s better not to evaluate the pros and cons of, “Can you do this or that?”

All the engineers in the audience are cringing.

The engineers are part of the solution. In this example, it’s like, “How do we make that work in another environment like shipping through the mail in a flimsy envelope?” I believe it’s true about all these ideas that entrepreneurs have about starting a new business, especially those based on solving a personal problem. We all know the story of Travis Kalanick sitting in the Paris suburbs. He couldn’t get a taxi so he thought, “Wouldn’t it be cool if I could pull out my phone and a car would show up?”

All these businesses that have that personal connection with solving something you face have hundreds of problems or obstacles. If I’m like, “You can’t do that,” that’s such a disempowering thought. The way to approach it is by saying, “I don’t know the answer but I’m going to figure it out.” That’s what stimulates me. The thing that gets me up in the morning is, “How in the world are we going to figure this out?”

That’s why people want to surround themselves with you. It’s interesting. Some of the companies I coach and consult with and I’m thinking of two, in particular, I told them, “I’m going to ban the title of Marc’s book. That will never work here.” If you say that, you will be out of business in 2 to 3 years. It is the kiss of death for innovation and brainstorming. It’s a limitation we put on our ability.

I don’t know much about your background. Where did that can-do attitude come from? You mentioned Uber. I also believe we can solve any problem. We just haven’t solved it yet. If you can’t focus on what doesn’t work, start with a clean slate and think about what does work. That’s why sometimes when you bring people into a company that’s struggling from out of the industry, they don’t have all the preconceived notions of how we always do things. Where did that unlimited belief, grit and determination come from? There are plenty of entrepreneurs reading this that want a piece of that desperately.

It comes from a couple of areas. One is my mother instilled self-confidence in me and always gave me positive feedback on whatever I wanted to do.

Give an example of that. How did she do that?

It’s better not to evaluate the pros and cons of what you can do. Every problem has a solution.

There was one point when I became an avid reader of a magazine called Scientific American. It was so inspiring. I was in third grade and I wanted to create a laboratory in my room. I wanted to build a desk that had a sink in it and all these trays for chemicals. I don’t know how other mothers are but she said, “Let’s go to the lumber yard and buy some stuff. I’ll get you a hammer, nails and a saw. You can put it together. We’ll then go to a chemical supply place.”

Halfway through the summer after my junior year in high school, I wanted to hitchhike to Canada with a friend. She said, “Sure. Here’s $40. Go for it.” Later on, I wanted to leave high school halfway through my senior year. Instead of saying, “No. You need to finish school,” she introduced me to a guy who had a black light poster company. This was in 1969. This guy gave me a job as his European salesman and a roll of posters. My mom bought me a one-way Icelandic airway ticket to Europe. She was always supportive.

What you’re saying is she fueled any imagination that was sparked within you.

She supported me wholeheartedly. The decisions may not have always been the right ones and the risks were pretty crazy but it gave me the confidence that there were no limitations.

People want to probably know this. Give us the reader’s digest version of your career. We’ll then get to the more interesting stuff like the relationships there.

My career is many years long. I started as a poster salesman in Europe. I was 16 or 17 years old. I was lucky to be at the right place at the right time. I made a ton of money.

Was that the smuggling of goods and money in Europe?

That’s after. Unfortunately, the poster business didn’t last long because one of the most popular posters was all the Disney characters in lewd positions. The seven dwarfs were under Snow White’s dress. You could see their little feet out underneath. The company got sued and went out of business so then I had to look for something to do.

Not being a high school graduate or having a college degree, you’re limited. I had been to Romania traveling across Europe and going towards Istanbul. I had seen these beautiful folk costumes that the women wore there. They were all hand-embroidered. They were typically made for their dowry. They were silk. It was beautiful.

At the same time, this was while it was behind the iron curtain. There was this arbitrary pricing for money in the country. There was an official exchange rate. I learned that you could buy Romanian money. All Eastern European money in banks in Geneva and Vienna is at 1/100th of the cost in the country. I don’t know where this idea came from but I thought, “I know how I can make money. I will buy this money in Geneva or Vienna and sneak it into the country. I’ll use it to buy things like these embroidered blouses, then take them back to the US and sell them.” I started doing that. I brought them back and sold them on Rodeo Drive in Beverly Hills. For the blouses I paid $3 or $4 for, I would sell for $300 or $400.

What was amazing is I saw this ecosystem that I could put together, which ultimately, I did eighteen times, where I would buy an old Mercedes in Germany and drive across Europe, first to Vienna and buy money. I would then go to Romania, buy all these things, then go to Greece and ship everything back to the US. I would keep driving across Turkey to Damascus and sell the car to taxi cab companies and make a profit there. I would then fly to Egypt and buy these awnings that they would make for me for restaurants in Sausalito and all over the San Francisco Bay Area. I would go home, sell the stuff and do it all over again. It was being opportunistic with some ability to buy cool things and sell them at a higher price.

You said something interesting. Not having gone to finish high school or going to college, you had limited choices. When you said that, I thought to myself, “Maybe in the corporate world but in the entrepreneurial world, my hunch is it has served you well even here.” You didn’t know that something wasn’t supposed to work and you weren’t supposed to do it that way.

That’s right. I learned over time but in the beginning, it was like, “What rules?” I had no idea. I did that and then eventually, I came back to the US right when the video rental industry got going in the early ‘80s.

That was Blockbuster, correct?

Blockbuster started years later. What I did was I became a customer of a local video store. There were four video stores in the San Francisco Bay Area at the time. Eventually, there were thousands. I became a customer and was spending so much money because growing up as a latchkey kid, my parents worked until 6:00 PM or 7:00 PM.

Did you grow up in the Bay Area?

I was born in Omaha but I ended up living in almost 6 or 7 places in California. My father was an aeronautic engineer. We kept moving from place to place. We have been to San Diego, Sacramento and 3 or 4 places in the Bay Area and then my parents got divorced. I ended up going to thirteen different schools between kindergarten and my senior year of high school.

Was it because your mom moved or you got thrown out?

We moved and then after she got divorced, I had three different stepfathers so I was constantly moving. That also had a lot of impact on how I look at things. I was having to make new friends every time.

For the younger people that are reading, this was pre-Facebook.

Be a sponge. Absorb and learn from the people you surround yourself with even if you feel like you don’t belong.

You become more adaptable at not only being alone but also more adept at making friends. After becoming a customer of this video store, I realized that they were doing things wrong.

How old were you at this stage?

I was 30. Every business or process I would see, in my mind, I would think, “That is clunky. Why do you do it that way?” In this case, this was pre-computers. They were doing triplicate paper receipts to rent movies. They had it in carbon copies, one inside the cassette and one attached by a paperclip to the member card. It seemed ridiculous and tedious. I was always looking for ways to improve it. One of the ways was to develop a vending machine that could rent VHS cassettes. That’s how I got going. I started a company called Video Droid.

You thought that was your baby and your brain.

I thought you’d take the internal and external theft out of it. You have an inventory system. Everything is done with a credit card. It made so much sense. I built a couple of machines in partnership with a Japanese company that I found and it failed miserably. People would look at the machine and go, “Why in the world would I use that kiosk? There’s a video store on every corner.” What I learned in that is I became a pretty good retailer. I began to learn customer service and merchandising. I turned the place where we were developing this product into a video store.

It almost felt like retail was in my blood. My grandfather was a shoe salesman in Omaha so I started feeling like, “I love this space of talking to customers, showing them all the new movies, laying out the store and doing the accounting.” I loved it. I started doing that. For the next fifteen years, I opened video stores with my brother. We had ten stores. I would spend, on average, 10 or 12 hours a day in 1 of the stores or another.

I joined the trade association and went on the board. I became president of the trade association and started getting exposed to people with a lot more education running big companies like Blockbuster and Hollywood Video who were on the board with me. At that time, I started getting exposed to all the analytics about the industry but unlike these executives, I had firsthand experience with customers. I found that I was able to interpret data with a lot more understanding of what data was important and what data wasn’t. What do you do with all these analytics?

I started putting that effect and built an internet business that put video stores on the internet through a subscription service. That’s when I met Marc Randolph and Reed Hastings at a trade show where I was demoing my internet service. Marc came to the booth. He and I have very different recollections of exactly how it happened.

For the readers that are subscribed, they know I’ve also interviewed Marc. I’m wondering if these stories match.

We shared each of our stories. He refreshed my memory a little bit and I refreshed his memory a little bit. He came up to my booth and wasn’t interested in what I was selling. He was interested in knowing what I thought about DVDs and whether there was a future in DVDs. This was in July of 1997. DVDs had come out in March of 1997 so it was still unclear whether the entertainment industry would adopt DVD as its main format and what the pricing would be.

He knew at the time I was president of the trade association that was putting on this big event with 15,000 video store retailers attending. He was interested in asking me all these questions about DVDs and then started walking away. He didn’t get my name. I didn’t get his name. Where our recollections vary is I thought he had a scruffy beard and sandals. He claims he didn’t have a scruffy beard and wasn’t wearing sandals.

Where was he living at the time? That will be the truth-teller.

Scotts Valley where he still lives right next to Santa Cruz. He started walking away. He had a backpack on. I remember thinking, “I don’t even have your contact info.” I grabbed his backpack right around the neck, pulled him back and yanked a little too hard. He went off balance and I said, “You haven’t given me your name.” I remember him reluctantly going, “Here’s my contact info. I’ll get in touch with you,” and he didn’t.

A couple of weeks later, I thought, “I haven’t heard from this guy.” He knew a lot. You could tell he was a smart guy. I reached out to him and we agreed between us to meet in Woodside, California at Buck’s Restaurant. In all the conversations, he kept asking me, “Do you think people would rent DVDs over the internet? Do you think people would buy them over the internet?” That’s how we came to work together.

How did Reed get involved?

Marc worked for Reed at a company called Pure Atria. Marc was the VP of Corporate Marketing and Reed was the primary shareholder and President. They had sold the company to a rational software that since has been bought by somebody else. The new owners said, “You’re all out of a job in September but go enjoy the summer. We’ll pay you through September. Go enjoy it.” Marc was looking for something to do and this was one of his ideas for a business. Reed said, “When you come up with an idea, I’ll think about putting money into it.” Reed invested in the idea of building a DVD internet video store.

Whose idea was that? Was that yours? Was it Marc’s or was it the two of you saying, “A-ha?”

It was Marc’s idea.

That’s what he says in his book but you never know.

It was 100% his idea but this was not a subscription. These were a la carte rentals. They were 1-week rentals for $4.99 selling DVDs.

Stop stressing more about what you didn’t get rather than being grateful for what you did.

My family did it. I remember us doing it.

The business, like all businesses, evolved. The idea of building an internet video store was his idea. I was there for five years. I brought Ted Sarandos to the company when Reed wanted me to move to LA to run content. One of the stupidest decisions in my life was telling him, “I enjoy being the head of business development.” I told him, “I have a good friend who would be amazing at the job.” That was Ted Sarandos, who was my rep from my video store.

Why do you say that was one of your dumbest decisions? What was wrong with that decision?

Ted is the most powerful person in Hollywood. Reed offered me that job and I turned it down.

Was it because you didn’t want to move?

I was having family issues but that wasn’t the main thing. I was very comfortable in my role there as the VP of Business Development. What I was doing was focusing on ways to bring in strategic partners to bring us subscribers. I did a deal with Best Buy. When Marc stopped working with the manufacturers, I took over those partnerships with Sony and big retailers.

You have to remember that I’m a clinical psychologist first. It informs all my coaching and consulting. When you said you were having issues at home family-wise, at that moment in time, is it possible that perhaps ever so slightly for that moment in time put a little scratch in your attitude of saying, “I’ll figure it out,” or confidence?

Yes. I was in a world with people like Marc, Reed, Leslie Kilgore and Patty McCord that were very smart and accomplished. I was trying to learn fast enough to not be seen as not belonging to the group. I constantly felt under pressure. I put myself in these positions several times in life where I’m around people who I probably don’t belong with.

You elevate yourself that way.

That’s exactly how I looked at it. I thought, “I can learn a lot. These people fascinate me.” I was like a sponge, whether it was listening in or reading what they wrote but at the same time, there was a certain amount of pressure. Once in a while and that time was one of them, I didn’t feel like I could make it work. My wife and I were arguing a lot, my kids wanted me to be around more and this looked like this huge job. I’m sure there are 3 or 4 other times where I’ve felt weak and not able to overcome or feel strong enough that I can overcome the challenges.

I feel you as you’re saying that. I feel the sadness from you. If I may offer this, we all get to places in life where our cup runs over at that moment. I’ve always worked around it. I have a very successful husband. I have four children. I’m a mom. I limited travel when my children were younger because we felt somebody had to be home. I can look back on that and say, “Where would I have been now?” That worked for me at the time. There are a couple of people I’ve worked with and you never want to go back. The past informs your future. If you go back and change it, you wouldn’t be who you are. You’re pretty cool now.

I’m with you on that. When I say one of my biggest mistakes, I don’t fret about it. Although, I should say I have noticed a characteristic that I have that many people have and that is stressing more about what you didn’t get rather than being grateful for what you did. I find myself having to fight that feeling once in a while where I go, “If I had only not sold my Netflix stock. If I had only taken that position,” but then I go, “I should be thanking God and being grateful for what I do have.” In weak moments, I find myself having to fight that.

There’s so much we could talk about here but I want to focus on you. In fairness to you, entrepreneurs are notorious for that. Dan Sullivan is arguably the best entrepreneurial coach in the world and is the Owner and Founder of the Strategic Coach. He wrote a book called The Gap and The Gain with Dr. Benjamin Hardy who’s a dear friend of mine and who I adore. He’s a brilliant young guy.

They talk about how entrepreneurs do exactly what you said. They’re like, “We didn’t do this. I didn’t do that. If I only did this,” as opposed to celebrating their incredible success. You’re so humble. It’s so obvious. You were at Netflix and Ted takes the position. You didn’t take the position. What else? You know they wouldn’t have had you in that room if you didn’t have a value add.

I always had confidence. I knew at the very least I could fake it for a long enough period.

This is Netflix?

This is still Netflix.

When did you sell your shares? Everything I’ve ever read about you talks about you saying that. Was that before it went public?

We went public in May of 2002. By the fall of 2022, our stock was cratering. It went from $15 down to $9 a share. I had set up with Marc Randolph’s help a 10b-5. It was a program that automatically would sell based on what was going on in the market. Since I was an insider on the executive team, I had to set that up six months in advance. Unfortunately, I set it up wrong. It was selling like crazy as it went down. I canceled the program and then realized the only way I can manage this was if I was out of the executive committee.

At the same time, I was doing a project that I thought was going to be one of the best things that ever happened to Netflix. Reed had me shut it down and it devastated me. It was called Netflix Express. It was putting Netflix vending machines where you could return your movies there, pick up new ones and sign up as a new customer instead of waiting, at the time, 2 to 3 days in the mail for your DVDs to come.

As a leader, find what motivates someone and customize the way you manage them to fit what they want, not what you want.

I had set up a location in Las Vegas at a Smith’s grocery store and it took off. It was signing up thousands of new customers. What happened was analysts who were monitoring Netflix stock got wind of it and asked Reed one time, “Are you going back to the physical world or should we think about you going forward to the digital world?” He thought that’s why the stock was cratering. Analysts were going, “These guys are thinking about investing in physical locations,” in other words, these kiosks. He had me shut it down. It devastated me. I didn’t respond in a normal, rational or thoughtful way. I blew up. I was hurt. 1 month or 2 later, Marc left the company.

Was it connected to that?

Marc was my partner in this but you’d have to ask him exactly why he left.

The two of you are very close. You’re both important to each other. He has been instrumental in your career from what you’re telling us.

I always admired Marc. He is a brilliant person and everything I’m not.

It was the perfect partnership. I’ve worked with business partners that kill each other. Many times, they partner with people that are like them. That’s a prescription for a disaster. That’s a perfect partner.

I remember Reed coming up to me in 2003 and saying to me that since we’re a public company, he didn’t think that I could survive in that environment. He said, “You always like to try things, experiment with things and not go through the process. We’re going to let you go.” That hurt but I found it very motivating because I swore I was going to show him that I could operate in a big corporate world. That’s why I joined McDonald’s.

McDonald’s had come to us while I was still at Netflix a few months before. They said, “We want to put kiosks in all the McDonald’s locations that rent DVDs as a way to build traffic.” You’ll come back to return it, smell the burgers and fries and create an incremental purchase. I had proposed that but they wanted someone that knew the video business to run it. They wanted Netflix to be their partner. We turned them down because everybody, including myself, at Netflix were what you’d call McDonald’s avoiders. We would never touch that food.

After Reed let me go, he said, “There is something you’re good at. I want to hire you as a consultant to go to Europe and Japan and explore expanding Netflix in those markets.” I did that and on my way back from England, I contacted these McDonald’s guys, stopped by and met them. I met the new guy who was taking over named Gregg Kaplan who has been one of my total inspirations like Marc. He asked me to join as COO of the six kiosk group in Bethesda, Maryland to try to build this business, ultimately, Redbox. I was COO and then President for eight years. I learned how to operate in a large company. I had 1,800 employees. It was an amazing experience.

Did you love the work?

Yes. Understanding that what consumers wanted in an entertainment retail experience was in my blood. I found the most rewarding thing was working with brilliant people and bringing the best out of them. I hit roadblocks. When we got to be about a $300 million a year business, I found that my VPs were not motivated and excited about their work.

At Redbox, when we got around the $300 million a year revenue phased by that time, we had about 15,000 kiosks, grocery stores, Walmart and so on around the country. My VPs were not as enthusiastic. They went from managing 2 or 3 people to 50 people each. I was stymied. I was like, “How do I get people excited?” They were just doing their job.

I ended up hiring an organizational psychologist out of Chicago who asked me, “How do you treat your team?” I said, “I treat them all the same. I give them respect and offer to help.” He said, “Everybody wants something different. This individual wants more respect. Another might want more money. Another one might want more challenges. Your job is to find out what motivates them. You need to customize that in the way you manage them to fit what they want, not what you think is the more democratic way to manage it.”

I started doing that and found amazing results. The next year, we doubled in revenue to $775 million. The next year, we doubled to $1.5 billion in annual revenue. Once they had the opportunity to get what they wanted, they changed and then did the same thing with their team. It was revealing. I had never imagined that could happen.

One of the companies I’m working with is a taxi company. I said, “What do you do for your team?” They were like, “We give them Fridays off and half days.” I said, “Have you asked any of them what they would like?” They looked at me and I was like, “Go back and ask,” and they did. The next call we had, they couldn’t believe it. They were like, “Somebody doesn’t want Fridays off. Somebody wants Wednesday mornings off.”

It’s amazing. As managers and leaders, we often are afraid to ask our team for fear of what they might want. What you find is most people are pretty rational. They understand the limits. More importantly, they understand what makes them tick.

Even if you can’t meet their need and I’m sure you’ve found this, they are so appreciative that you cared enough to ask. You can be like, “I can’t promise you but I want to hear in so many words what floats your boat.” They will tell you that. I hear that all the time from the coaches. They say, “I tried it. It was so simple.” I’m like, “We’re not reinventing the wheel here. This is human motivation. This is human behavior. All they want is to be heard.”

I was fortunate to sit for two years at a small 4-foot table alongside Patty McCourt who is the Head of HR at Netflix. What I learned from her is this whole concept of diversity of thinking and creating those environments where people felt empowered to talk. There are so many times when your direct reports won’t tell you the real story. They’ll color it to make you feel good or not have to explain things.

Create a sense of competence that you could say something and not have repercussions.

One time, there was this young kid. It was his first day on the job and we were in a meeting. He blurted out what he thought was messed up in the way we operated. Nobody else would have done that. He was 100% right in everything he said. From that point on, I always would include in meetings someone who was new to the job and hadn’t learned to be politically correct. It kept the managers on their toes. They knew, “If I don’t say what’s happening, this guy or this woman is going to.”

What you did with that was you created the trust. If I don’t tell you something that I know you are doing wrong and you’re offending people, many times, people will say, “Kill the messenger. I don’t care enough to tell them and risk their wrath.” That’s the history of why so many companies’ stock has crashed, they’re out of business or somebody’s going to jail. It was not new news to the people in the company but the culture was not trustworthy to speak the truth to power.

There’s nothing more important than, at least in my mind, to create that sense of competence that you could say something and not have repercussions. It’s important and hard. It’s hard to create that environment, especially when things aren’t going well. When things are going up to the right, it’s a lot easier.

You gave me the perfect segue into MoviePass. You’re such a nice guy. I almost don’t even want to go here. You have the captain of the ship but everybody has to be rowing the boat in the same direction. Was that part of what happened there?

The vision and the business model could have worked. It is no different from Netflix or Spotify. Spotify lost $1.4 billion before it started making money. Amazon, for twenty years, never made money.

Do they even make money?

They do because of AWS, their server business. Had we been given enough time and not been owned by a publicly traded company, I’m convinced we would have made it. The problem is that in this particular case, there were some smart people in the movie theater business and the studios that saw that we were too much of a disruption. I liken that to this. Imagine if United Airlines, Hyatt Hotels and Hilton could have kept Expedia and Orbitz from existing. They would have because you’ve got a business in between them and their customer.

The mantra for all companies is to build your brand and have a direct relationship with your customers so that you can predict, manage and get the best value. The precedence of several of the theater chains and companies like Fandango and others realized that we were to be inserting ourselves between them and their customer. We would be monetizing that where they should have. Eventually, they did launch their movie clubs and so on.

I have two chapters on MoviePass. The second chapter is about how I forgot everything I learned at MoviePass. It was when things started getting difficult and challenging, I didn’t go back to all the things I had learned at Redbox and Netflix about dealing with challenges like competitors who don’t want you to succeed or employees that are losing faith. It was almost like I had a brain freeze. The only explanation that makes me feel slightly better is that all this happened within the space of twelve months. It was this meteoric rise and disastrous fall.

Why does that make you feel better?

With the amount of time being so compressed, when I think about what I should have done and all the other things going on at that time, it at least makes me feel slightly better. For me, it was a real example of a failure that was embarrassing, sad and revealing that I do need to be more thoughtful about the challenges and deal with them a little bit faster than I did at the time. It’s an awful feeling but you can’t revisit the past except in ways to help you going forward. It taught me a lot of lessons for the future.

I would love to keep speaking with you but you have other appointments. Sometimes, you win. Sometimes, you learn. You are so humble. I feel bad that you say you are humbled and you feel bad about that failure. It’s the quote that the person that’s in the arena fighting will never criticize the guy that loses in the arena. It’s the person that’s sitting on their couch doing diddly. There’s a part of me that feels like if you’re still in the arena, the best is yet to come for you. I have two quick questions. One is of all the lessons and wisdom that you have, what is the one most important thing you’ve discovered about life, business or anything that you want people to know?

It’s to surround yourself with smart, passionate and interesting people who are driven to make their dreams come true. To me, that makes everything worthwhile, whether you succeed or fail. If you have that stimulation of wonderful people around you, that’s the key.

My last question is what is the last book you re-read and why?

There are two of them but the last book I’ve read and read twice is called The Secret Life of Pronouns. It’s a fascinating little book. It’s not a big book. I went back and re-read it because I found it so telling in conversations with people. The basic theory is the more someone uses a pronoun instead of the real name of the person, the less respect they have for that individual or thing.

It’s almost like Warren Buffett’s technique he uses to identify executive hires. He takes them to a little diner in Omaha and watches how they treat the staff. Everybody always treats people higher up better and treats their peers probably better but how do they treat the people who they might think aren’t as good as them or as educated as them? I found the theory of that book a great indication of people I might want to work with as I start to get a little bit more thoughtful about who I work with going forward.

I suspect that everybody would want to work with you. I can’t imagine you not being polite and respectful to anyone, even to an ant on the ground. You’re so compassionate, empathic and humble. It has been such a pleasure. Thank you so much. For everybody, make sure you read Watch and Learn: How I Turned Hollywood Upside Down with Netflix, Redbox and MoviePass.

When you read this book and the more you learn about Mitch Lowe, the more you will realize he is such a gift to humanity. You will also come away smarter and kinder because of it. Thank you. That concludes this episode of the show. As promised, Mitch Lowe took you for a ride. Make sure you check out his book and you like comment, share and subscribe to this show. Until next time. Be well.

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About Mitch Lowe

Mitch Lowe has been a leader in some of the most influential and disruptive companies in the entertainment business.

Mitch never graduated from high school. After a youth spent smuggling goods and money in Europe, he invested in and eventually ran video stores in the 1980s and 1990s. He was a cofounding executive of Netflix. After leaving Netflix, he became an executive at McDonald’s, eventually creating the DVD kiosk business that would become Redbox. Under his leadership as president and COO, Redbox became the third largest video rental company in America, growing to 35,000 locations and $1.5 billion in revenues.

Mitch invested in and became CEO of MoviePass, a movie theater subscription service that acquired three million subscribers in eight months. While MoviePass never succeeded, it significantly influenced the trajectory of the business of movie theatrical exhibition.

Lowe uses his experience from working with successful startups like Netflix, Redbox, and MoviePass to teach entrepreneurs how to simplify their business and to create winning product ideas using intuition, perseverance, analytical thinking, and love.

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