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By Ben Feuer

At Forster-Thomas, we believe in visionary leaders and entrepreneurs.  Every now and then, we like to highlight one who is doing a job that, for one reason or another, jumps out at us.

Reed Hastings wasn't cut out to be a marine.  As a guy who was more interested in reorganizing knapsacks than following marching orders, he found his niche at Stanford in Computer Science.

Reed founded a company named "Pure Software", grew it, and sold it.  For most Forster-Thomas budding entrepreneurs (TM), that's mission accomplished.  What was Reed's reaction?  "I did a mediocre job."  He knew that the second time around, he could do better.  Take heed, aspiring leaders -- good enough is NOT good enough.

So why Netflix?  Was he well connected in media?  Did he have venture capitalists breaking down his front door?  Nope.  He had a late video charge.

HASTINGS: "I had a big late fee for 'Apollo 13.' It was six weeks late and I owed the video store $40. I had misplaced the cassette. It was all my fault. I didn’t want to tell my wife about it. And I said to myself, 'I’m going to compromise the integrity of my marriage over a late fee?' Later, on my way to the gym, I realized they had a much better business model. You could pay $30 or $40 a month and work out as little or as much as you wanted."

Let's recap.  A guy with no entertainment background goes up against what is (at the time) an enormous entrenched company in Blockbuster, working from a business model (mail-order DVD rentals with an online queue) nobody had any idea would work.  How do you pull that off?

Simple.  Innovative management strategy and strong leadership.  Individually managed vacation time, high salaries ... and a quick pink slip for subpar performance.  Hastings called it "Freedom and Responsibility".  
Things took a turn for the worse in 2011.  Remember Qwikster?  Netflix hopes you don't.  That was their (failed) attempt to spin off their DVD business from their growing online business.  It created a lot of confusion, to say the least.  But if he was wrong in the execution, Hastings was dead on when it came to the principle -- his bread and butter business was dying out, and he needed something new.

At the same time, film studios were squeezing Netflix for higher and higher fees.  So why not kill two birds with one stone?  Create studio-free, DVD-free content for mass online consumption -- episodic media divorced from the cable box?

One "House of Cards" and one "Orange is the New Black" later, Netflix is poised to take over yet another entrenched mediocracy no one thought was going anywhere.  New competition = better shows.  Bring it on, Reed.

(for more on this guy, check out his Wikipedia page.)


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