Can a budding business outclass and overtake the domineering one that has billions of dollars at its disposal? Well,
Netflix did just that against Blockbuster in the DVD rental and online video streaming business sector. You must make sure your small business is always the “David” and never the “Goliath”, when faced with similar situations. But how was Netflix able to achieve this big feat?
In this week’s article we feature an inspiring article by Ontrapsot’s Associate editor, Megan Monroe. In the article, she collates various articles on past interviews and statements made by Netflix’s founding CEO, March Randolph; with a view to identifying 8 key lessons you small business can learn from their experience, if it wants to “stand its own” even against industry giants. As always, read and be inspired to positive action as you strive for Financial Freedom through the running of your small business enterprise. Here are excerpts from Megan Monroe’s article for Ontrapost…
There are few startups whose growth has been monumental, or as iconic, as that of Netflix. What began in 1998 as a tiny online DVD rental and sales business has transformed itself into the world’s go to online video steaming platform.
Marc Randolph, who co-founded the company with Reed Hastlings, was instrumental in the rapid growth that occurred as Netflix focused on becoming the leading DVD rental subscription provider and eventually took over Blockbuster’s market share by embracing the shift towards online streaming.
If you are an entrepreneur or small business owner who’s looking to grow a company of your own, here are eight lessons you can learn form Randolph to kick-start your business’s growth and outsmart the competition!
1. There is No Right Moment to Take The Jump.
Marc Randolph believes that the only way to figure out whether or not an idea is really going to work is to try it. He said that “the only way to do it is to jump.” Timing will never be exactly perfect, and you will never know everything there is to know about improving your chances for success. The only way to prove it is to do it!
2. Focus On What You Do Best
Marc Randolph has attributed a huge chunk of Netflix’ success to their decision to focus on the DVD rental subscription model in the early days even though they initially made far more revenue by selling DVDs. Wow – for a young CEO like myself —turning away from the source of 95% of our revenue was just about the hardest thing I had ever done. ‘The moral of the story? Even if it hurts in the short term, by focusing on the clearest value proposition you have to offer you can dramatically increase your shot at success in the long-term.
3. Know The Game You are Really In.
It seemed so unlikely – how could a tiny (but scrappy) startup like Netflix beat out an industry leader like Blockbuster that had billions of dollar? The point is, Blockbuster could have easily won the video rental game if Netflix had continued to compete against them there – but Netflix realized they were actually competing in the home entertainment space. The takeaway here is the absolute importance of knowing the competitive landscape you are really operating within. Netflix embraced a subscription model that could encompass both DVD rentals and video streaming, and so built up the customer loyalty to capitalize on the shift to digital video – which is where they really dominated Blockbuster.
4. Harness The Power Of Storytelling.
Co-founder Reed Hastings had a story about how he got the idea to start Netflix after being embarrassed by to large late fee on his rental of “Apollo 13” But the truth is, that story actually never happened. Communicating the value of Netflix had to offer customers an easy to tell, easy to understand narrative helped Netflix forge the emotional connection with users that strengthened its brand and insulated it from future turbulence. Think about this: How can you use storytelling to build strong connections with your market?
5. Be Prepared For the World to Shift at Any Moment.
Unlike nimble Netflix, Blockbuster was saddled with debt, encumbered by store rental costs, retail staff wages, and shacked by fixed costs across the board that made them much slower on the uptake even after they made decision t embrace steaming. Marc Randolph asks, “What happened when the world shifts? How well positioned are you to handle it? We were set up very well to do that.” If your business is going to take advantage of the shifting landscape, you can grow dramatically in a short period of time – but only if you are ready for it.
6. Know What You are Personally Good At (And What You are Not)
Marc has said that one of the smartest decisions he made was to have Reed Hastings eventually become the CEO of Netftix. Why? Marc knew his talent could make more of an impact during the early stages of a business like Netflix – and was prepared to let someone whose talent complemented his own, step in and make a bigger difference when the time was right. Ask yourself, what area of your business should you delegate to someone else? Where can you make the biggest impact, and where can you allow the company to grow by stepping aside to make room for someone with a different skill set?
7. Partner With Smart People
Although Marc’s talent in presenting ideas was key to building the organization in its early stages, by partnering with an analytic thinker like Reed, they become an unstoppable duo. To apply this concept back to your business, think about the people you have surrounded yourself with. Do they make your ideas better? Do they help to make your business even more unstoppable? If not, find someone who does.
8. Plant The Seeds of Your Future Company Culture Today
Focus on developing a culture before you even have more than a handful of employees; now is actually the very best time to make choices about what the character of your company is going to develop into. Randolph’s decisions during Netflix’s early days molded the company into what it is today, although he stepped out of the CEO role more than 10 years ago.