It is not the strongest or most intelligent of companies that become Empires. It is the company that is most willing to adapt. Netflix knows a thing or two about changing and growing and being know as a market leader.

David Young:

Welcome to The Empire Builders podcast, teaching business owners the not-so secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode a word from our sponsor, which is, well it's us, but we're highlighting ads we've written and produced for our clients. So, here's one of those.

[Royal Plumbing Ad]

David Young:

Stephen, when you told me you wanted to talk about Netflix, my first thought was are we talking about the original Netflix or the Netflix of today or are we talking about the evolution because there's a lot to talk about with Netflix.

Stephen Semple:

And we're actually talking about all three, because we've got to go back to the beginnings, because the beginnings is where the stories are about how they became this successful thing that they are. So, we're definitely going back to the beginning. We also do need to touch a little bit on the evolution because they went through an evolution I think a lot of people have forgotten about. Because it's easy to forget that this company was founded on August 29th, 1997 and it was founded by Mark Randolph and Reed Hastings. So, this is long before or streaming. Heck, this is back when the DVD was launched, was created, because here's what ended up happening. So, Hastings had sold a software company. He had built a successful software company and he sold the software company and he decided he had two and a half million dollars that he was willing to invest in a startup.

Stephen Semple:

So, Mark and Reed had been creating all these ideas when they were working somewhere else and they were creating all these ideas, what should we start? And they had actually developed the idea of Netflix back when there was, remember the big VCR tapes coming back in those days? And what they realized is they couldn't make the business model work with a VCR tape, because what their business model was, they were going to sell and rent through mail and they just could not make the VCR so, they shelve the idea. And then one day they're driving into work and they hear an advertisement for a DVD. They go that's it, this will freaking work. They literally stopped the car and they tried to find a DVD to buy. They couldn't find one to buy. This is how new it was they could not and they're in freaking Silicon Valley and they couldn't find a DVD to buy.

Stephen Semple:

So, they bought a CD because they were like well, this is close, put a stamp on it, mailed it. Because they wanted to see whether it would work and low and behold the next day a DVD shows up in the mail and they go, let's start this company and that was August 1997. And they started with 30 employees and 925 DVD titles. And here's the funny thing is, 925 DVD titles was the entire DVD library. The entire DVD library was 925 titles. That's where they started and by April 2021, 25 years later, they have 208 million subscribers, they're doing $25 billion a year in revenue and have got 12,000 employees. Huge success and in fact, in the decade of 2010, they were the best performing stock on the market. The stock had a 3693% return.

David Young:

And other than still being in the entertainment distribution business it's not even the same company that was in 1997.

Stephen Semple:

No, not at all.

David Young:

They used to send a physical thing and now it's all streaming and online and who doesn't have it?

Stephen Semple:

They came up with this idea long before the internet was a big thing and before streaming and all of that. The interesting thing is,