Leave a Comment / Posted in Barry McCarthy, Blog Post, Christina Kish, Corey Bridges, Founding Team, Leslie Kilgore, Marc Randolph, Mitch Lowe, Netflix History, Patty McCord, Reed Hastings, Te Smith, Ted Sarandos
One of the coolest things about researching Netflixed was the abundance of blackmail-worthy photos I discovered, and this leavened the excruciating task of reviewing thousands (literally) of pages of transcripts of earnings calls and analyst presentations that I had sat through once when they actually happened.
My first thought when I saw this particularly hilarious specimen—taken during an executive retreat at the Alisal Guest Ranch in Santa Ynez, California—was that I wished I had come across it years ago. Visualizing Netflix CEO Reed Hastings in a cheerleader skirt and CFO Barry McCarthy dressed like a fraternity punk definitely would have relieved the pressure of those rapid-fire post-earnings interviews.
This one of Netflix’s founding team, including (Redbox co-founder) Mitch Lowe, Te Smith, Corey Bridges, Christina Kish and Marc Randolph, is another favorite. It was taken at their first trip to the Video Software Dealers Association convention in Las Vegas. Here’s how Corey describes it:
“This is from the 1998 VSDA trade show, Netflix’s first big public outing. The five of us went to the show and had a hell of a time, personally and professionally. It was one of the high points, where we got face-to-face industry feedback (admittedly from a minority of people) communicating we were onto something big. This picture was at the Playboy Wet & Wild Party, which took place at a damn water slide park. So this is an evening party, and you’ll notice that we three guys were in our ‘okay, we can get into water slides’ outfits. The ladies were obviously having none of that.
“You’ll also notice that Marc and I are holding martinis. What a good idea that was, to mix water slides and martinis. But what else can you do but accept it graciously, when a bunny hands you one?”
Although this screen shot of Netflix’s first home page would be embarrassingly cluttered by today’s standards, it was pretty cutting edge to the 1997 e-commerce customer—still unsure what a “shopping basket” was and nervous about putting his credit card number into the Internet’s vasty depths.
I traveled a lot to dig up the story of Netflix because I wanted to see the places I planned to describe in my book, since the setting in Silicon Valley—its new Gold Rush ethos and uber casual atmosphere—was so important to how Netflix developed and what it became as a brand. The most important journey I took was a trip “over the hill” on Highway 17 to meet Marc Randolph at the place where it all began—Santa Cruz.
The narrative for this trip is in the prologue, which you can read on the Sample Chapter page so I won’t reiterate, but for those of you who wanted to know what that journey down Pacific Avenue looked like (15 years later, that is), this is for you:
The rich aroma of coffee provokes the strongest memory I have of this day and of Lulu Carpenter’s, where Marc and Reed talked over ideas for starting an e-commerce business and started the fateful stroll that climaxed with the mailing of a naked compact disc to Reed’s house to test whether the new DVD format could survive postal sorting equipment.
This Borders bookstore was going out of business the day Marc and I retraced his steps leading to the “A-ha” moment that marked Netflix’s birth as an idea for a business. Initially I thought Marc and Reed bought the CD they mailed to Reed’s house at this place but it was actually down the street at the indie Logos Books & Records. Very fitting but sadly, I don’t have a pic of that.
Here’s the card shop where they bought the envelope (along with the gift card they threw away) to mail the disc.
And… back to where they started at the Santa Cruz Post Office across the street from Lulu Carpenter’s.
We next drove inland toward Scotts Valley so Marc could show me the first “office” Netflix used—what is now the breakfast room at this Best Western.
Am I a complete geek to feel thrilled to see the actual first headquarters of Netflix, in this very generic-looking office park? Probably yes. One of the most poignant moments I had on this trip was watching Marc walk through these halls and relate how scared he was in the early days.
He sent me back via Highway 17 bus, spellbound, to relate what was fast becoming a strongly narrative and emotionally rich story over Ghiradelli-laced brownies and wine with my sister Alicia and brother-in-law Mike.
Welcome to my blog, which will focus on the story of Netflixed—why I wanted to write this book and what I encountered while researching it. I have a lot of fascinating (to me, anyway) tidbits that I couldn’t quite cram into the book without taking the narrative on a Nantucket sleigh ride (whaling reference), so I decided to share them here.
First, a little background:
I joined Reuters in June 2002 as a general assignment reporter after having won a few awards for investigative stories I wrote for a Los Angeles legal newspaper. I planned to continue my investigative work at Reuters, the world’s largest news agency, but two years later was swept into the financial beat in a news room reorganization. Little did I know that what I considered a long career detour would provide the seeds for my biggest investigative project ever—my first book.
These days, the life of a wire service financial reporter consists mainly of sitting in front of a pair of computer screens, and monitoring stock movements and a constant flow of company press releases. It was fascinating to learn about the market and every day was fast paced but did not allow deep analysis of the big themes or personalities I was covering. For me, meeting and observing people, learning their stories and motivations and watching their choices and narratives across months or years imbues a life in journalism with its richness and beauty.
That’s why the Netflix-Blockbuster story, with its David-and-Goliath aspect as well as tragic elements of hubris on both sides, appealed to me so much. Although I spoke regularly with Blockbuster Chairman and Chief Executive John Antioco and Netflix Chairman and CEO Reed Hastings, the interviews (usually after quarterly earnings calls) were generally brief, rushed and centered on financial results and strategy. The subtext of the monumental struggle between the two—what was really going on inside the companies, how they managed to stay focused, what inspired them—was never revealed. The story was so tantalizing, but out of reach for a wire service reporter.
I very much admired DisneyWar by James B Stewart—the Walt Disney Co was one of the companies on my beat—and I thought Stewart did a brilliant job describing how the clash of personalities at Disney affected its financial performance and by extension the dynamics of the U.S. entertainment industry. I thought I could do the same sort of narrative with Netflix.
After eight years and thousands of stories written at Reuters, I decided to risk everything, quit my job and try to write the story that had obsessed me for so long. The deciding moment was a conversation I had with my brother, John A Sopuch III, in which he told me over dinner at Morton’s in Burbank, that he was tired of listening to my echolalia over whether I should quit to write a book. “Just quit. You’ll be too scared to fail.”
He was right, and I dedicated the book to him.
I knew most of my protagonists and many of them knew that I had been toying with the idea of writing a book about Netflix and Blockbuster. My first interview for the book was with Shane Evangelist, the former general manager of Blockbuster Online who had by then moved on to become CEO of US Auto Parts Network in Carson, California. It was the first of several conversations we would have over the next two years about the amazing ride he had as a 29-year-old head of the only rental company to give Netflix a real run for its money.
Shane persuaded former Blockbuster Chairman and CEO John Antioco to meet with me the next time Antioco came to his Southern California vacation home. Antioco, who had left Blockbuster three years earlier and was running the Red Mango yogurt chain, told me flat out that he didn’t think there was enough of a story to fill a book. He changed his mind when I reminded him of the multiple dramas—both inside Blockbuster and against Netflix—that he had dealt with during his decade at the helm of the world’s largest video rental chain.
Next, I tracked down Marc Randolph, the guy who had co-founded Netflix with its Chairman and CEO Reed Hastings. We first met at a breakfast joint in Los Gatos, where Netflix headquarters is located. When I learned about Netflix’s founding and early years from Marc, I knew I had a great story. There was no real record of the company’s early struggle to define its image and business model, so hearing about that from Marc and his founding team was thrilling. Although all of the founding team except Hastings had left Netflix before I started covering it in 2004, most of them kept mementos of their little startup. I was pretty excited when Marc showed me this sheet of yellow legal paper with the names they considered before settling on NetFlix.
Shane and John and Marc opened a lot of doors for me after our first meetings in the spring and summer of 2010. I subsequently met the tremendously talented teams who worked for these guys. Each person added a dimension to the story that made it live for me—and I hope for readers of my book. I’ll write more about them in coming posts. But I’ll leave you with one of my favorite photos of Netflix’s early years.