Ideas for innovation are abundant in today’s ecosystem, and not all of them work out. But that shouldn’t stop you from trying. Today’s guest is Marc Randolph (@thatwillneverwork), the Cofounder and Founding CEO of Netflix and author of That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea. He is undoubtedly among the best of the best in Silicon Valley. In this episode, he sits down with Dr. Patty Ann Tublin to share stories from his book and narrate his entrepreneurial journey that birthed a platform that has fundamentally altered how the world experiences media. Marc also touches on the importance of having the right values, priorities, and culture in an organization to foster healthy relationships that lead to success. Get valuable insight from a man that changed the game by tuning in.
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Listen to the podcast here
That Will Never Work: The Birth Of Netflix And The Amazing Life Of An Idea With Marc Randolph
You are in for an incredible treat. You’re going to love this interview so much. You can even go ahead, like, comment, share, and subscribe to this show. To say that our guest is a visionary and a thought leader is an absolute understatement. I’m not going to read his bio to you because then you’ll probably know who he is, but he is right up there with the best of the best from Silicon Valley. You name Jeff Bezos, all of them, he’s right up there with them. You are going to learn from him and get his pearls of wisdom. Put on your seatbelts because Marc Randolph is about to take us for a ride. Welcome, Marc.
Thank you.
Marc is the Co-Founder and the former CEO of Netflix, but I don’t want to start with that. Marc is so much more than someone that started Netflix. He is an entrepreneur extraordinaire. As a matter of fact, as someone who is a human behavior expert with a Doctorate in Clinical Psychology, who studied psychoanalysis, I found out that Marc’s paternal great, great grand uncle is none other than Sigmund Freud. To say you’re a thought leader is an understatement. Is that true?
That is true.
He was dead. You’re not that old.
I’m not that old. He didn’t live that long. Certainly, he lived on in our family’s memory. There were books of him on all the shelves. I still have a side photo of his down below me in the bedroom. My other great uncle, not my great-granduncle, was a guy named Edward Bernays, who in some ways was more coincidentally aligned with what my career ended up becoming.
You were playing more in his sandbox, in his space as opposed to Freud’s. When you think about it, there is a connection that we all speak about the unconscious. That didn’t exist before Freud. We say it automatically, dreams, all that kind of stuff. Even though a lot of what Freud said we know isn’t true, that’s okay. He revolutionized the way we think about the mind. You did the same thing. You did in your sphere. You revolutionized the way people consume information for entertainment and education.
I would’ve shortened it to consume content.
That’s why you get the big bucks.
I’m practiced. It’s true. Freud, you’re right. He helps us understand why we think what we think. The reason I threw Edward Bernays in there is he realized it’s possible to change how people think in a way that they don’t necessarily recognize as being changed. The combination of those two, for someone who spent their entire life, is fundamentally a marketing person. It’s almost too coincidental to not for there not to be something, some DNA connection there.
Why don’t you share with us your entrepreneurial journey? I brought up your family. I was doing research on you and I’m like, “This guy’s amazing.” I do believe that our past doesn’t dictate our future, but it influences it. You have a family of thought leaders, obviously brainiacs. Originally, you are from the East Coast, right up the street from Chappaqua. Is that true?
It’s true.
I saw you went to Hamilton. I’m like, “Few people from the West Coast make it over to Hamilton.”
I still drink coffee.
Tell us about how you became an entrepreneur because you went to Hamilton. You majored in Geology and rocks.
I was a bad student, too. I was like a 2.7 GPA. It depends on how you define that. Certainly, in the classical definitions, I had a poor GPA. I failed one of my English Literature classes. I had two D’s in Economics, ironically enough. The real point of this whole youth thing is that entrepreneurship has been this glorified thing that there are books, movies, and TV shows like Shark Tank. There’s this myth of this entrepreneur. When I was growing up, that didn’t exist.
You worked for IBM for 30 years. You got a watch and retired.
You fail thousands of times but lo and behold, the world doesn’t end.
There certainly were entrepreneurs, but they were generally thought of more popularly as people who couldn’t hold a job. Me getting into it becoming an entrepreneur was not, “Me growing up, I’m going to be like Jeff Bezos,” who was my age or younger. This is something that I was drawn to and compelled to do, not something that I aspired to. From the time I was little, I was naturally someone who, not to put a negative spin on it, saw the world as imperfect.
I would see problems. Rather than complaining, dismissing, or ignoring them, I would go, “There’s got to be a better way to do that, to fix this, or to try this.” At the time, I didn’t know what that was, but looking back, you can so much see those patterns. I had my first job when I was eight years old. I was a door-to-door salesman, selling seeds, like vegetables and flowers.
In those little packets?
That’s the one. For the American Seed Company. It verged on child exploitation because the rules were if you sold 7,000 packets, you weren’t a whistle or a stopper, but I was into it. Little kid, knock on doors. Most of the time, nothing happens. Rather than slinking home to watch Leave It to Beaver reruns, I would say, “I’m going to figure this out.” I would try different approaches. I would dress differently. I would say different things. I had this thing. I had to figure it out. That never stopped.
In middle school and high school, I was always the person who was starting little clubs and putting on little performances. In college, I said my grades were bad. It’s because I majored in Geology, but I fundamentally majored in extracurricular stuff. I used the opportunity to start things. I ran the outing club. I launched a humor magazine. I put on a bunch of plays. I use the opportunity there to see these holes and immediately want to fill them.
What was interesting is I was playing entrepreneurship. I was doing the exact same stuff. I was convincing people to join me and help me and not paying them. I was going to a student government and convincing them to give me a small amount of money. I was figuring out how to promote this thing I was doing to the campus audience, all in an incredibly safe, supportive environment. If it didn’t work, I still had a meal. I still had a roof over my head, but I was learning these basic fundamentals. At the same time, training myself that I found this thing incredibly compelling and emotionally and intellectually satisfying.
As you’re speaking, I am getting caught up in your passion. We tend to think entrepreneurship and success are ones from pain. It is clear that when you look back on it, for you, it came from excitement. There’s a problem. There has to be a way. You touched on something. I want you to talk about it because I am sure you’ll have such great advice for the readers. You talked about failure. Failure is such an integral aspect of entrepreneurship. Being an entrepreneur is not for the faint of heart. You’ve funded and founded so many successful entrepreneurial businesses and many that failed. My sense is that you have a different mindset or perspective about failure. Talk to us about that, please.
One of the biggest questions I get asked all the time is, “Tell us about your biggest failure or some significant failure.” I’m using that to get to what you’re asking, which is that I can’t answer that question. It’s because I don’t think about it that way because I failed so many times, thousands of times. What I’ve learned is that lo and behold, the world doesn’t end.
I’m not saying that being scared of failing is not a weird thing. It’s natural to not want to make a mistake. It’s not natural to want to do something. You’re not sure how it’s going to work. You don’t want to look funny or be embarrassed, but you go, “I’m not sure if this is going to work or not. I’m not sure what’s going to happen if it doesn’t work.” You try something and it fails. You’re bracing for the roof to collapse and people to laugh, but none of that stuff happens.
It doesn’t paralyze you.
There’s no consequence whatsoever. Once you learn that, it is so unbelievably freeing. That’s not something you learn academically, where you go, “Don’t be scared.” The only way to train yourself not to be scared is to do it enough times that you realize, “This is not scary.” Doing things that you don’t know what the outcome’s going to be can be incredibly exciting once you realize there’s no consequence for getting it wrong. The fundamental tenant of entrepreneurship is this being willing to try things that have not been done before and that you don’t know in advance if they’re going to work or not.
It’s almost a definition of an entrepreneur. John Maxwell, the leadership guru says, “Sometimes you win and sometimes you learn.”
I don’t know if you speak other languages.
I speak Brooklynese.
That’s a dialect.
I am actually trying to learn Spanish because I am embarrassed that I don’t know. I took French and Latin in high school, the classic check-the-box thing. I’m on Duolingo. I’m on a 182-day streak, but I was counting.
Congratulations.
Thank you. It’s a challenge I’m trying to learn.
The only way to train yourself to not be scared is to do it enough times.
I’m sure your parents went, “It’ll be good for your English.”
If you go into college and if you were smart.
My claim to fame is I happened to suck in six languages. It means I’m bad in French, Spanish, Italian, Russian, and Latin. I’m good at English. Anyway, what I’ve learned about learning languages is something that goes exactly to this fear of failure thing. The way you learn a language, and pardon me for the Duolingo is okay for this, is not by learning vocabulary and the rules of grammar. It is by having the courage to walk into a coffee shop when you happen to be in Mexico and walking up to the counter, opening your mouth, and being a grown-up person like you and I are, and having something come out that sounds like you’re five years old.
That takes courage. That’s the only way you learn a language. Entrepreneurship is identical. In fact, doing anything new is like that. You have to have the courage to do something you’re not good at, master those skills, and learn how it goes. You don’t learn golf by watching videos and reading books on golf. You can do that, but you got to go out and hit balls. Doing anything challenging is going to be like that, including entrepreneurship.
I’m so glad you talked about that because there was something I was reading, or it was an interview about courage. If you fail, the people that will criticize you are not the man in the arena fighting, but it’s the person in the stands that never took a chance. It takes courage, but how did you overcome failure after failure? You are only human. After a while, it’s like, “Can I get up one more time?”
First of all, there are two different types of failures here, which we’re talking about. I get disappointed too, when something I set my mind on, I’m sure it’s going to work that we worked hard at, doesn’t work. You get knocked down unless you’re disappointed. You can’t help but sulk, want to go into a dark area, and curl up. Probably the biggest trick I’ve learned for avoiding that is I’ve trained myself to never fall in love with my ideas. Instead, I try and fall in love with the problem.
It’s ideas that don’t work. “I have this great idea.” Your tendency is to nurture this little baby. “Imagine when it’s going to be a valedictorian or a Heisman Trophy winner.” Just as likely to do crack behind the 7/11 or something like that. The problem will never abandon you. The problem gets richer and more nuanced the more you learn about it. The key to avoiding disappointment is if I go, “This idea is everything. I’m putting all my hopes into this idea,” I’m going to be crushed when it doesn’t work.
It’s one little thing to collide with this problem I’m trying to solve then it doesn’t work, but I’ve learned something. At the very least, I’ve learned what doesn’t work. Usually, I also gained some insight into who the consumer is or what the problem is. That is almost more exciting than the disappointment that the thing didn’t work. That’s what makes you get up every morning and go, “That yesterday’s thing didn’t work. I cannot wait to get to the office and try these next 2 or 3 things.”
It’s a challenge, not an obstacle.
There’s no question about it.
What about the belief that a lot of entrepreneurs you hear talk about where any problem can be solved if you ask the right question? You have a problem. What I’m suggesting is this is the problem. It’s almost like YouTube. How to? How do I look at? What hasn’t been taught?
There’s no problem you can’t solve if you have enough time and resources because there are always different things you can try. There’s nothing in my belief that’s truly intractable. You look at all the amazing advancements. They did not come because something fundamentally shifted in the world. They shifted because somebody had a crazy idea that no one else had thought could possibly work and then they had the guts to try it. It did work. It opens up this entirely new avenue of exploration. Since we’re pulling out classics, it’s the four-minute mile, which everybody goes, “It’s impossible until Bannister ran one.” Within the next 6 to 8 months, 20 more people ran it.
I always say it’s impossible until somebody figures it out. I ended up talking about Elon Musk. I’m not a stargazer or any of that. What I love about Elon Musk is that he defies the odds and looks at everything as a challenge. He will figure it out and find a way. There’s so much work behind that. You wrote a phenomenal book that I love the title, too. Do you want to talk more about Netflix? I figured everybody asks you about Netflix. You’ve moved on.
I talk about Netflix and a lot of interesting lessons because people know it. You’re about to bring it up. I did write a book about the experiences of starting and growing Netflix.
That Will Never Work. I loved that when I saw and read that because as a consultant, I am always told when I present something to do, “That will never work here.” I tell them from the get-go, “That is the kiss of death.” As soon as you say that won’t work here, that means that you will not innovate and go the way of Kodak. What are you looking for?
I’m writing that down because that’s awesome. That’s going to be the sequel to That Will Never Work. That Will Never Work Here.
It’s the same concept. I am sure that is behind so much of your genius. Talk a little bit more about that. How did that apply to Netflix? How did that apply to your life? What you’re up to now going forward? That will never work, to me, means game on.
That’s exactly what it’s meant to be. That Will Never Work is, in some ways, my motto in a sense. The book is called That Will Never Work. I have a podcast that’s also called That Will Never Work. It’s because that’s what every single person told me when I pitched them the idea for Netflix. It’s what the investor said. It’s what the early employees all said. It’s what my friends said. It’s what my wife, God bless her, said. It’s fine because everybody who has ideas hears that. They’re all excited. That’s what they said, “That will never work.” What you realize is that the second most favorite phrase of mine is, “Nobody knows anything.”
Never fall in love with the idea. Instead, try and fall in love with the problem.
It’s impossible to know in advance if an idea is a good one or a bad one. Anyone who tells you that’ll never work, they don’t know. The only way I’m going to find out is by trying it, by testing something, building something, making something, or selling something. That Will Never Work is my reminder. I expect that. My wife and I joke, it’s become like this negative indicator that if she doesn’t like an idea, we both go, “A-ha. This is a good one.” It is true. The worst thing is if you let other people tell you something that works. I’m not saying don’t listen to why they think it won’t work. Listen and absorb.
Do due diligence.
You don’t want to fall in the same hole someone else’s falling in, but never take that at face value as a reason not to do something. That Will Never Work is our encouraging rally and cry for entrepreneurs who all figure it out.
My sense is that when people say or when I hear, “That will never work,” I will say, “Tell me why.” You can hear the thought behind that. You can also hear their self-limitations, which by the way, you don’t have to make your self-limitations. Do you find the pearls of wisdom that will help you?
Yes. For example, the podcast is basically where I’m mentoring people. These are not me talking with successful entrepreneurs. It’s sessions that I would do with an early-stage entrepreneur, trying to coach them through a business problem.
How generous of you. That’s awesome.
The thing is there’s so much entrepreneurial advice, which gets boiled down to little Instagram-worthy nuggets of wisdom, exactly the attitude, which is correct, but that isn’t helpful. What you need is the context. How does it apply to me? How do I do that? Doing these live sessions is me walking through a concept with someone. How do you take something which we all know is the case? How do you work in practice?
The thing is when you realize who you want to work with, I’m talking about mentoring when I do something where I’m mentoring someone for multiple weeks, months, and years. I’m looking for two specific traits. In some ways, contradictory traits. I’m looking for self-confidence because when everyone’s telling you, “That will never work,” over and over again, when you’re bumping into problem after problem, if you don’t have the self-confidence that says, “Eventually, I’m going to figure it out,” you’re going to give up.
You’ve got to believe in yourself. You’ve got to have that optimism, but you’ve got to also temperate with this other trait, which is this willingness to listen, try, and understand a different point of view. If you can, integrate that into your thinking, because otherwise, you’re going to blindly plunge ahead. You’re going to fall into the exact same holes a lot of people have fallen in before you. You need to have a sense of self-confidence, but this openness to other ways of thinking. Adam Grant was one of my faves. He calls it, “Arguing like you’re right, but listening like you’re wrong.”
I do want to ask you a question though. I found something you said interesting. Why would you position these as two contradictory personality traits? To me, self-confidence comes from the ability to listen and be an active listener.
In my experience, I don’t see those two traits overlapping that often. A lot of people, especially in Silicon Valley, have self-confidence.
That’s a whole new world.
“I know everything. How dare you tell me? This is not the way it is. What do you know?” They would go ahead with whatever they believe and aren’t willing to listen.
They’ll say to you, “What do you know?”
No, because I try and listen about 4 to 1, as much as I speak. I’m making an exception for you. usually, I go, “I know what I know.” I don’t know what they know. My speaking is largely trying to clarify, “Is my understanding correct?” rather than trying to convince someone or something. It’s contextual, but generally, that’s having a strong internal sense of what you think is right but still being open.
I’m glad you’re speaking because people want your wisdom. You might be mad at me, but what you’re describing in Silicon Valley, and we have all the geniuses on Wall Street here. Maybe I’m splitting halves here, but I don’t consider that self-confidence. I consider that arrogance.
We’ll do it this way. It’s arrogance when it’s not coupled with an openness to other ways of thinking. It’s self-confidence when it is. How about that?
There we go. I love that because I love when people are self-confident. I do feel that that is matched with maybe some humility that, “I don’t know everything. Tell me.” When someone says, “That will never work,” I believe that will never work, but please tell me how you think it will, then you stop brainstorming. When people must be lining up around the block to be mentored by you. You can select whom you want. You have the personality traits, the self-confidence, and the willingness to listen. What else are you looking for?
Nobody knows anything. It’s impossible to know in advance if an idea is a good one or a bad one.
The most dominant thing is I’m looking for someone I like. I’m going to be spending a lot of time with this person. I’m going to be helping them usually with difficult things that are emotionally complex, challenging, and upsetting potentially. If I don’t enjoy spending time with this person, it becomes a chore rather than something I would look forward to. My litmus test is if the phone buzzes next to my bedside at 11:00 PM and I look at the caller ID and I wince, that is a bad sign. Life is too short. You’ve got to enjoy the people that you spend time with.
When you started Netflix, you had a cofounder?
Yes, even probably a better entrepreneur than I am. it is Reed Hastings, the Co-CEO and Chairman at Netflix.
I worked so much with the relationship aspect of business, especially with co-founders and partners. There must have been so many things that you and Reed had to work through during your time there. How did you navigate that? I do understand Freud is in your family, but we got to get more up-to-date here. All of that relationship stuff, being aligned, core values, was it fair to say two relatively strong egos in the room? How did you navigate that?
Besides having some common interests, and I don’t mean golf or something like that, both of us enjoyed the metrics aspect of the business. Both of us liked risk-taking. Those are reasonably common. The thing that immediately drew Reed and me to each other when we first met was both of us shared a perhaps less common trait, which is radical honesty. This feeling that life is way too short to mince words, shade the truth, or try and avoid hurting someone’s feelings. It’s so much more efficient, powerful, and fulfilling to be able to say exactly what you think. Trust the other person not only can handle that but would appreciate that.
Reed and I had that relationship from day one. In fact, you can talk about culture later, but culture springs from how the founders behave. That culture of radical honesty has permeated Netflix ever since. It’s one of its big competitive advantages. Reed and I were always able to have it out if we needed to. If we disagreed, we would both argue vociferously for what we thought was the right way to go. As soon as we turned the corner and realized that one of us was right or the other was right, or there was a combination of the two, it was almost like immediately, you forgot whose idea originally was. It didn’t make a difference. It didn’t even occur to you.
It was self-evidently right. This was the way to go. You fall in behind that. It was this incredibly effective way to work together. In the beginning, there would be these meetings we would have. Reed and I would be enthusiastically trying to convince the other one of a certain way of going. You could almost look up and you would see people around the table almost with this look like, “Why is mom and dad fighting?” It was a way that Reed and I found we could get to this fundamental truth and best practice to do for the business.
You said so much there about conflict resolution with business partners, which comes up all the time in my work. Many business partners do the kiss of death mistake. They avoid the problem. You avoid it. You laugh. A lot of people do that and then they become emotionally attached to their position. You also said something that is brilliant.
As a foundation, I will tell people, “Don’t worry about the problem right away. Don’t look at the conflict. Look for common ground. What’s the common denominator? What do you agree on? Fight it to the death, maybe on how to operationalize it or get to it.” You do know everybody doesn’t have the thick skin that you and Reed have and had. Would you say that brutal honesty, difficult conversation style with other people in the company?
Radical honesty is radical honesty. You should never ever say something about someone behind their back that you wouldn’t say to their face. You should never have information that we can’t trust that person to know. It’s a terrible way. Forget until we got to run a business. It is not the way you attract and retain phenomenal people.
I misspoke. What I meant was would you tell the difficult? Would you speak differently to people?
Yes.
It’s because you said people are like, “Woah.”
There’s a little surprise as they get used to this manner. You grew up in Brooklyn, is that right?
There you go. The center of the universe.
My mom grew up in Flatbush. I knew that part of the world. I grew up similarly. The dinner table was short of food, flying back and forth. It’s not because you’re mad. It’s because you have these opinions and everyone’s used to it. They’re trying to get a word in edgewise and it’s a way to do it. You recognize sometimes you go to visit your friend who’s your college roommate whose parents are from Kansas. They don’t quite behave the same way, especially in a Silicon Valley startup where you have two fundamentally different personality types. You have the business marketing side and the engineering analytical side. It’s Mars and Venus.
One of the things you learn if you work out here long enough is I can go to Reed or anybody in that side of the business and say, “Here’s what you do,” and then he’ll fight right back at me. An engineer won’t. They will absorb and nod. Nodding doesn’t mean I agree. Nodding means, “I understand what you’re saying. Now I need to go back, process, and calculate scenarios and algorithms.” I could mistakenly walk away going, “Good. They’re convinced. They’re on board.” Days later, “I’ve been thinking about it as a terrible idea, and here’s exactly why.” Honesty is honesty, but it was certainly the manner in which you deliver and deliberate is going to be different.
I always say you can pretty much say anything to anybody. It’s all in how you say it. I like to call my style the thundering velvet hand. Anybody that works with me will tell you. Dr. Patty, no BS, she tells it as it is. If you couch it from a place of empathy and caring, to have that honesty means you care enough to tell them the truth. Otherwise, you’re like, “I don’t care. I’m not about to have that conversation with you.”
“Argue like you’re right and listen like you’re wrong.” – Adam M. Gran
Can I tell you a great Reed and Marc honesty conversation story?
I would love it. Please.
This one is in the book too, and perhaps a little bit more detail. There was a point when we started Netflix, Reed wasn’t there. He was my chairman, but he was going back to school.
How old were you guys at the time?
I was 38, Reed was 37. I was running the company and Reed was the Chairman of the Board. He would stop in on his way home from school and we would chat about the business sometimes. This was maybe not long. Reed stopped by later in the evening, poked his head in, and said, “We’ve got to talk,” which is not usually a good omen. He came in to tell me he was concerned about my leadership. He helpfully prepared a PowerPoint slideshow.
He’s an engineer at heart. He had to organize his thoughts. “Reed, I am not going to sit here and let you pitch me on how I suck.” He goes, “Okay,” and closes the laptop. We had this conversation. His basic message was, “I’m concerned about your leadership. We’re doing great now, but I see signs of problems. If there are problems at this scale, they’re going to be more significant when we grow. Execution is going to have to be flawless.”
He outlined some of the things he’d seen. At the moment, I thought he was going to fire me or something because he was the Chairman of the Board. He had more stock than I did because he had invested money in the company, too. What I realized as we were talking is he wasn’t planning to fire me. He was proposing that he joined the company full time and we run the company together.
It was a difficult moment because one of the things you have as an entrepreneur is you have this dream of, “I’m going to start and run this big successful company.” There comes this point where you recognize, “Maybe these are two separate dreams. There’s the dream of me starting and running and the dream of a big successful company. What if those dreams aren’t the same? Worse, what if the dream of a big successful company isn’t just my dream anymore? It’s the dream of my employees, the dream of my investors and maybe it’s the dream of my customers.” When Reed said that he thought I wasn’t the right person to solely run the company, it was hard.
What made it work was the trust and honesty that I did not for a minute think that Reed had an ulterior motive. I didn’t think he was angling for something. I don’t think he was saying that if he felt these things and I respected him, which I did and do, then I had to take his comments seriously. I went home. My wife and I split a bottle of wine, sitting out on the porch for hours, talking about what should I do, and how should I think about this. I fundamentally decided he’s right. It’s hard to argue that the company wouldn’t be stronger with both of us running it together. I decided that I would do that. He would come in. We would split it. We’d be co-CEOs.
He would run the engineering, the finance, and the operations. I would run the marketing, the website, and the customer service. In some ways, looking back, it is probably the best decision I ever made at Netflix because it marked the beginning of the Renaissance at Netflix. Some of the most important things happened in those next five years we ran the company together. The point is that couldn’t have happened or at least I don’t think it could have happened if I had not trusted Reed completely and recognized that he was speaking truthfully to me. I could not be an egotist about it.
Did you have a choice?
Implicitly and explicitly.
You could have said no and stayed run in the company or you would have been gone and he was coming in to run the company?
I don’t know what the outcome would have been if I had said no, but I know he would never have forced it on me. We might have said, “Let’s sell the company.” He might have said, “Let’s do something differently,” but Reed would never have forced something. If he was, he would have told me the first thing out of his mouth.
There’s no guesswork.
It was laid out honestly and emotionally. I could tell, this is going to sound stupid, but with love rather than with anger or complaint.
It doesn’t sound stupid at all.
He genuinely recognized how difficult this would be for him to say to me, how difficult it would be for me to hear, and had the honesty and the courage to say it anyway. I had huge respect for him for that.
Culture, in a business context, is the most important thing. It’s more important than almost anything else you do.
I wish more people around the world could have those conversations with brutal honesty, coming from an authentic, genuine place, agree to disagree respectfully, and then find a way.
It’s worked out remarkably well. Reed is still running the company. He is having the time of his life. Maybe moments here and there going well, but genuinely playing this global chess game, which is what he lives for. I have not worked there for many years. I’m getting a chance to every day, come in and spend my day doing the thing that I love, which is working with early-stage companies. I’m getting a chance to spend time with my family, getting a chance to have time to go backpacking, mountain biking, trail running, and surfing, and the things that make me whole. Look at Netflix. It’s a verb.
That’s when you know you’ve made it. It’s a verb, Google, Netflix. You mentioned something. You said that you equated entrepreneurial funding as an investor. You compared that to being a mountain guide. Talk a little bit about that.
I’ve often said that one of the best leadership educations I ever had was during my time in the mountains. It’s funny, you recognize a similarity. There’s a part of my youth, my late teens or early twenties, where I was a guide. I taught outdoor leadership for a school called the National Outdoor Leadership School, NOLS. We basically took groups of people of all ages, adults, and kids on these long expeditions into the mountains to teach leadership.
What I realized is that this is similar to what I do now. Back then, the methodology is they would say, “You’re a leader of the day. Here’s where you’re going to be going. Here’s your group of 4 or 5 people.” This is for a person who might be fifteen years old. “We’ll see you at camp tonight.” This person now has to make decisions.
They have to decide, “Are we going to go the easy way in the valley, which is longer or are we going to go up and over the pass shorter but climbing? Are we going to try and cross the river? When are we going to stop for lunch? How long are our breaks going to be? What happens when someone says, ‘I’m getting a blister?’ Do I say tough it out or keep going? If I get lost, what do I say? How do I communicate to my group?” All this stuff. This is someone who is fifteen years old and is being given real responsibility with real consequences where they find out 8 to 10 hours later how they did. I did that when I was fourteen.
How did you get involved in that?
My mom packed me off to Wyoming when I was fourteen years old. I thought I’m just going to summer camp. Lo and behold, there I am being dropped off at a trailhead. The truck driver goes, “We’ll see you in a month.” Off I go. On the first day, you walk in with the main leaders, the paid leaders. The second day, it’s, “Randolph, you’re the leader of the day.” You’re like a deer in the headlights. You learn how to better assess the strength of your group. Otherwise, you get into problems.
You learn how to communicate with clarity and confidence. “Here’s where we’re going,” even if you’re not quite so clear or confident yourself. You’ll learn to think about, “When do I stop? How long are my breaks?” You learn all this stuff when you’re fourteen. You make a lot of mistakes and have someone who comes in afterward that goes, “Did you see what you did? What happened when you said this? What happened when you didn’t say this?”
There were immediate consequences. These days, no one who’s 14 and 15 gets to make real decisions with real consequences at that age where they learn the results of their actions so quickly thereafter. Little by little, more and more responsibility. Pretty soon, I’m one of the paid instructors. I’m leading the entire course. By the time I got to be in a position where I was doing this for money in an entrepreneurial setting, it wasn’t the first time. I know how to communicate with clarity and confidence where we’re going even if I’m not quite so sure where we’re going. I know how to vest the strengths and weaknesses of my group.
I know how to talk to the person who is the leader, who was the strong one, and say, “Let’s slow down so we can all be together.” I know how to talk to the weaker person and say, “We’re going do this together. Don’t worry about it. Let’s take some of your weight. We’re all going to make this as a group.” You learn these things that are internalized. The best way to do this practice, open your mouth in the coffee shop, be embarrassed, and learn how to do it better. Leadership is no different. I learned so much about that in the mountains.
I have many thoughts as you were speaking. One is your mother is from Brooklyn because they have smart women. She knew. My joke is if you shake somebody’s family tree hard enough, somebody from Brooklyn will fall out. With everything that you talked about, I’m thinking this is how you make Special Forces. On some level, the Boy Scouts were supposed to teach that, but seriously, being a team, how to speak, and motivate. What keeps screaming at me is you’re speaking emotional intelligence.
In other words, it’s the ability to recognize the empathy to how people are going to respond to the way that you’re communicating with them or with the situation you’ve put them in and then be able to respond appropriately.
To each person, what motivates one person is different than another. For some people, is it the carrot or the stick? You have three children, right, Marc?
I do.
You know what worked for one doesn’t work for the other.
I sometimes say that one of my skills that ended up being hugely valuable in the eCommerce world, which is what Netflix was, was something I used to call remote empathy. That is being able to understand how someone’s going to feel and respond when I can’t see them. In other words, I’m going to price something a certain way. I’m going to write a letter a certain way. I’m going to start a paragraph a certain way.
How is someone who sees that going to respond? Direct empathy is still hard, but easier. I say something and I see you open your eyes, nod, or turn your head to this. I’m getting all kinds of clues that you’re either happy, upset, or curious. It’s hard if I said, “Get behind that door.” I’m just going to say it and try and imagine how you’re taking it. It’s a little bit trickier.
99% of erosion takes place in 1% of the time. Culture is like that. Most of this imprinting takes place in very conspicuous incidents: who you hire, who you fire, and who you reward.
I keep thinking as you’re saying that. That’s your brilliance in marketing, email marketing campaigns, and copywriting. All of which, quite frankly, I have to hire people to do because it’s not my wheelhouse. Does AI play a role in this? Are we moving into AI with this stuff?
I hope not. First of all, I’m not an expert either. I certainly probably know more than most people about it, but I don’t geek out on it. It doesn’t interest me that much. I’m still old school. I’m the person who goes back, rereads old emails I sent, and go, “That was good.” I love that old-fashioned method of communicating. AI will help. It can certainly help create shortcuts. In other words, ultimately, I don’t believe it’s yet ready to replace the unbelievable ability we all have, the emotional intelligence to be able to read these thousands of subliminal cues. We lose something as a people if we ever lose that.
I wonder where you are as an entrepreneur at this stage in your career. I don’t want to sound like grandmother time here, but everything has an upside and a downside to it. I have seen in my work and my life that people do not know how to communicate and connect. When you do something, there are consequences. I think a lot of what’s going on in the world. I might get in trouble, as an epic parenting failure. Quite frankly, in our generation, not only are there no consequences, we insisted on the best teacher. If it’s an 89, we got to give the kid an A. Where are we with that now? How is that influencing your work?
It’s this thing which has caused the problem. Those of you who are reading, I’m holding up my cellphone.
We want to know who’s born with this glued to the hip for anybody younger than 35.
This is the true “Get off my lawn” part of the show. It’s like, “Come on, get your head out of that stupid thing for a while.” One of the beautiful things about these NOLS courses that I was talking about is they’re device-free. There are two things. One is you’re device free. Second, within about 3 or 4 days, everyone looks and smells the same. You’re not hiding behind hairstyles, makeup, clothing, and swagger.
It’s a chance to connect as people. I’m an environmental advocate. I love being outside. I love hiking, climbing, skiing, backcountry skiing, surfing, and anything that gets me. It forces you to live in the moment, disconnect, and spend time relating with people as people. There’s so much power to it. I’m not sure what you and I can do. Every generation has said, “This is rock and roll.” You and I did okay. Who knows? Kids will adapt, but they’re missing something.
You are the eternal optimist. We’ll find a way. There was a letter that was written and it talks about this younger generation. They’re rude. They’re this. They have no work ethic. It was written by Benjamin Franklin back in the 1700s. You’re right. We will adapt. I do feel that we are in somewhat of a paradigm shift in society, especially on the heels of COVID. There were a lot of people that died. That’s a horrible thing.
I do feel that there was a lot of shake-out from COVID. Honestly, as a mother of four children, working women have been begging since they went into the workforce to be able to work from home. There’s a lot of positive to be said. You can create a culture, but you can’t use it with the old paradigm shift. Do we have time you want to talk a little bit about culture?
Certainly, in a business context, culture is the most important thing. It’s more important than almost anything else you do. It is to have this effective culture. In a nutshell, I always say culture is not aspirational. It’s observational. It’s not something that you go into a conference room and design what you want your culture to look like or put together a PowerPoint of, “Here’s what we think,” and then put it on nice little posters and put them in the break room or wear them on little pins. Culture is how you act. It’s how the founders act and treat each other. It’s how they treat their employees and customers.
As parents, you learn firsthand that what you say counts way less than what you do. You can talk until you’re blue in the face, “We were all about trust and honesty.” As soon as your kids see that you’re not being honest, they go, “Okay.” It’s important. That’s the same thing with company culture. It’s got to mirror who you are. You’ve got to be consistent. You need to call each other on your stuff. If you’re not being true to the things you are.
How many companies go, “We have a no bad attitude rule?” Until the person is a super high-performing bad guy who we can’t afford to let go of and then all of a sudden, there’s a carve-out. Let’s talk about culture in the last few minutes here, because I can go on forever about this. Culture is like erosion. 99% of erosion takes place and 1% of the time. Remember, I’m a Geology major. Culture is like that. Most of this imprinting takes place in conspicuous incidents, which is generally who you hire, who you fire, and who your reward.
As a coach, people will have someone who’s not working out at the company and on personal leave and then they will turn to their department and go, “Emily is leaving to spend more time with her family. She’s leaving to pursue other opportunities.” You go, “You dismissed an unbelievable learning opportunity to say what your culture is about and that you mean it. Emily’s not here because one of our most important things is that we bend over backward to do what’s right for the customer. She consistently on these various occasions was going the opposite.” I’m making something up.
She violated the cultural norms of the company.
We feel so strongly about that, but we decided she’s not the right person to be here. I do a lot of keynotes speaking. A lot of times, you’ll get up there and the CEO gets up front and goes, “I’m excited because as you know, the theme for this year is to think differently and reward risk-taking. We’re going to need a minute here from Marc Randolph to talk about innovation risk-taking. Before we do that, I’d like to bring up our sales leaders for the year. We’re going to talk about innovation risk-taking, but we’re going to reward the people who make the money for us,” as opposed to going, “We’re going to bring up some people who took some big risks here, and I’m going to send them on a two-week trip to Hawaii, even though it didn’t work.”
It’s permission to fail. Companies mean it when they’ll promote the person where it didn’t work.
Send the signals loudly that this is what they believe and what we stand for.
I feel as someone where trust is the linchpin in all healthy relationships. When you have a violation of trust, the sooner that violation is addressed, it is indicative of the health of the organization and a positive culture. Do you agree with that?
The single biggest thing that rots an organization from the inside out is when you have that failure of trust.
I do. The single biggest thing that rots an organization out from the inside is when you have that failure of trust. It can go the opposite way. You can take a general standard of trust and begin taking it even further. I don’t work on Netflix now, but for example, I don’t know if you’re familiar with what their travel policy is. There isn’t one. What their expense policy is? There isn’t one. What their education policy is? There isn’t one. It’s because they trust people to make good judgments on their own. They trust people. Everyone knows that everyone else makes because they encourage people to go out and apply for other jobs. We want you to understand your true value in the marketplace.
This radical honesty as radical transparency is not just something that is good to have. It is a competitive advantage. People don’t join companies, stay there, and like there because of the kombucha on tap, the nap pods, the fireman poles, and all the other things that companies seem to think are what you need to do. Fundamentally, people want to be treated like adults. They want to be trusted. They want to be given responsibility and freedom. The more you can do that, it’s a superpower.
I have one more question and then I want you to tell people how they can find out more about you. What is the last book you re-read? Why?
It’s corny. What you’re thinking perhaps is that Marc is deliberate about what he reads and puts things on a bookshelf and constantly swaps the order but it’s not. I’m much more an opportunist and going, “This book’s finished. What’s next?” It’s like watching TV. I got onto a John McPhee jag. John McPhee is an incredible nonfiction writer, SAS, but writes these incredibly interesting books because he embeds himself deeply. One of his finished readings is about transportation, where he talks about cross-country trucking, freight trains, tugboats on Mississippi, and transatlantic cargo ships. He goes and spends months on these means of transportation. That’s what I re-read.
You’ve read it more than once?
I read it when it first came out many years ago and then got hooked because someone recommended one that I hadn’t read before. I read it and I go, “I love this guy’s writing.” I went back and re-read a whole bunch of other stuff that I’ve read a long time ago. You read differently when you’re older.
I lied. I have another question. What is the one most important thing you’ve learned about life that everybody needs to know?
I’ve got a bunch of them. The most important thing is that balance is the most important thing in the world.
Define that.
For individuals. I’m not saying for world peace. I started 7 companies and 2 of them have been huge billion-dollar companies. I’ve got three IPOs. I have all kinds of stuff that would be considered a traditional success. That is not what I’m proudest of because I favor balance. What I’m proudest of is that I managed to do all that and stayed married to the same woman for 35 plus years, my best friend.
I had my three kids grow up knowing me and best I can tell, like me, and made sure I had time in my life to pursue the other things that made me whole, which are all my backcountry stuff, my skiing, my surfing, my kayaking, and all those things. That was hard. Entrepreneurship is a demanding mistress. As other things work, I had to prioritize them. The most important thing is finding the three parts of the stool and making sure I build the life that works for that. Looking back, that’s what I’m proud of. I’m incredibly lucky that I’ve been able to pull that off.
What you said is to strike that balance, you have to be intentional.
That’s an understatement. It has to be the most important thing you set out to do every day, every hour, every week. When I was about 30, I was working all the time, on weekends, nights, and holidays. I was living with a woman who’s now my wife. It dawned on me, maybe with a little bit of encouragement from her, the daunting part, that she was getting leftovers. I realized that that’s not the basis for a sustainable relationship. More importantly, it doesn’t work like this. I have to do something differently. She’s never going to be complaining at the same level the business was calling out for my attention. It was going to require me to back off and say, “How do I plan a life?”
I had a lot of things I did to make that happen that were not easy. If there’s one example, it’s not all Marc started Netflix, Marc started Looker, or Marc started this. That’s not the example to take. The example to take is it is possible to have that business success and have a solid relationship with your friends and your family, and have time to pursue the things that make you whole and alive.
With my work in business and business relationships, I’ve seen so much working with founders and CEOs that I work with entrepreneurs in their intimate relationships because the challenges are so different. It’s exactly what you said, it’s a mistress. Marc, please tell our readers where they can find out more about you, how they can get your book, how they can listen to your podcast, and all that good stuff.
The ground zero for Marc Randolph is my website, which is MarcRandolph.com. That’s where you’ll find links to buy the book and the audiobook. There’s a new paperback edition with a new afterword. It’s where you’ll find links to the podcast and my writing. If you don’t have the patience for a 360-page book, or for a 30-minute podcast, you can digest it in nice 200 and some odd character tweets, or if you want, you can get me dancing on TikTok, LinkedIn. It’s all there. It’s all my attempt seriously to give back and say hopefully some of the things I talk about will help other people have the same chance to see the fulfillment of being an entrepreneur that I’ve had.
Thank you so much. This was so much fun. This is enlightening. I literally could have you here for hours, but all good things come to an end. Again, thank you. That concludes this episode. As promised, Marc did not disappoint and he took us for a hell of a ride. Make sure you like, comment, share, and subscribe to this show. We’ll see you next time. Be well.
Important Links
- Marc Randolph
- That Will Never Work
- That Will Never Work – Podcast
- MarcRandolph.com
- https://www.Instagram.com/ThatWillNeverWork/
- https://YouTube.com/Channel/UCGvn4Lkghbuw6DVOIKS5q_w
- https://Twitter.com/MBRandolph
- https://www.LinkedIn.com/in/MarcrRndolph/
- TikTok – Marc Randolph
- Marc Randolph’s writing
About Marc Randolph
- Co-founder and founding CEO of Netflix.
- International bestselling author – That Will Never Work
- Veteran Silicon Valley entrepreneur, advisor, investor, speaker, environmental advocate.
- Loves to surf.
- Podcast host That Will Never Work
- Every Tuesday Clubhouse 5pm PT / 8pm ET That Will Never Work Live
- Blog – essays, tips and thoughts for entrepreneurs.
- Currently director of Looker Data Sciences.
