Photo credit: www.cnbc.com
Many entrepreneurs might eagerly accept an eight-figure offer for their startups, but Marc Randolph and Reed Hastings took a different path. During the early days of Netflix, the co-founders received an unexpected opportunity when Jeff Bezos expressed interest in meeting with them, as Hastings recounted in a December episode of the “First Time Founders with Ed Elson” podcast. When the co-founders arrived at Amazon’s Seattle headquarters, it became evident that Bezos was considering acquiring Netflix to facilitate Amazon’s venture into the video market.
“It was more of an exploratory conversation than a formal offer,” Hastings explained.
The year was 1998, and Randolph later shared with CNBC Make It that Bezos’ team valued Netflix at “somewhere in the low eight figures.” At that time, Amazon was also relatively fresh on the scene, having launched just four years prior and gone public a year before, raising $54 million. The company was making moves to expand its portfolio through various acquisitions, including those of other online retailers and even non-book entities like IMDb.com.
Randolph noted that when someone mentions “low eight figures,” it usually refers to figures barely in that range, estimating the offer to be between $14 million and $16 million in his 2019 memoir, “That Will Never Work.”
On their flight back home, the Netflix founders weighed the advantages and disadvantages of selling. Despite high operational costs and the absence of a reliable, profitable model, they recognized they were “on the brink of something.” They had effectively positioned Netflix as a leading supplier of DVDs online, which made them an attractive player in the market.
Ultimately, they agreed that the timing wasn’t right to abandon their vision and politely declined the deal once they returned home. Randolph reflected on this experience as a valuable lesson about evaluating opportunities, suggesting that while it’s not essential to accept every offer, it’s crucial to assess possibilities as they arise.
“We declined and then worked tirelessly for the next 20 years,” Hastings remarked.
In 2000, Randolph and Hastings faced a different scenario with Blockbuster, hoping to sell their venture for $50 million. However, CEO John Antioco dismissed their proposal, even finding it humorous. In his writing for Vanity Fair, Randolph noted how the disparity in perception between their ambitious startup and Blockbuster’s established corporation became apparent.
“It became clear to us that if we wanted to achieve significant growth, we would face considerable competition from them,” Hastings remarked. “Initially, we thought about partnering with them, but they saw no value in us.”
Randolph departed from Netflix in 2003, while Hastings continues to guide the company as its executive chairman. Today, Netflix stands as a dominant force in video streaming and production, boasting a staggering market capitalization of $411.34 billion and reporting over 300 million subscribers globally.
Source
www.cnbc.com