Netflix CEO Understood "mailing people DVDs was a mere way station on the road to streaming video.”

By Kenna McHugh Comment

Chunka Mui, who co-authored “Billion-Dollar” Lessons with Paul B.Carroll, wrote an interesting piece for on the success of Netflix CEO Reed Hastings’ vision to stream movies over the Internet directly into people’s homes.
Mui suggest that Hastings should really get credit for “the diligence with which he prepared the way for his vision – and that method is one that others can emulate.”

I agree because the Internet is an ever changing habitat that is sure to open new visions as it evolves beyond mainstream movies.

Mui points out that Hastings was motivated by a big idea “that mailing people DVDs was a mere way station on the road to streaming video.”

One might think that Netflix success is very simple and straightforward. On the other hand, if you think about it or even look at Hastings process, especially after the fact, perhaps there is more to his diligence. Mui suggests following each of the four steps that Netflix followed.

Think Big. Hastings pursued his big idea, streaming video, although it would eventually render obsolete his clearly successful mail-based system for distributing DVDs as a launching platform.

Start Small. While Reed Hastings had a big idea that he strongly believed in, he began with lots of small projects that proved fruitful and if they didn’t then the losses would be of the same scale.

Fail Quickly. The early labors of streaming video looked risky, so Hastings saved his money for the day when the risk was clearly minimal. He invested very little at the onset.

Scale Fast. Netflix is now scaling streaming video fast, holding the lead it worked so hard to build over competitors.

Mui points out that Netflix is still very much a work in progress. Reports are surfacing that Hasting’s company is in talks to buy the rights to a television program, which would put it in direct competition with networks and perhaps quicken the trend toward ending a monthly subscription to a cable-television or satellite-television service (called “cord cutting”) and drawing content directly from the Internet via Netflix or other service.

Mui article is worth reading because he not only covers the success of Netflix, but he also compares other companies that took a different approach without the same success.