Newsletter 55: Netflix Almost Failed — Until One Simple Idea Saved It
Hi Hedgelings,
Netflix wasn’t always a household name. In fact, its earliest version was... kind of a joke.
Picture this: It’s 1997, and someone pitches DVDs by mail. Slow shipping, clunky discs, and late fees? Not exactly a billion-dollar idea.
But Marc Randolph, Netflix’s first CEO and co-founder, didn’t just pitch it—he tested it. Fast. Cheap. Again and again. Until they stumbled upon the one idea that did work:
💥 A subscription model with no late fees—something Blockbuster refused to try.
In this email, we’re unpacking:
- The Netflix origin story you haven’t heard
- The brutally honest truths about startups
- Why “bad ideas” are actually the best place to start
Let’s dive in.
🎬 Netflix Was Nearly a Disaster
Netflix lost $50 million in its early years.
The original business model—rent a DVD, pay per movie—wasn’t working. Customers hated late fees, shipping times were long, and DVD players weren’t even that common yet.
But instead of folding, Marc Randolph and Reed Hastings started experimenting:
- What if we charged a flat monthly fee?
- What if no one ever paid late fees again?
- What if people could build their own queues and get movies delivered automatically?
Each idea seemed worse than the last... until they tested them.
And then? It clicked.
Netflix’s success came from flipping an industry-wide pain point into its greatest strength. No late fees + convenience = consumer loyalty.
🧠 Every Idea Is Bad—Until You Test It
Marc makes it clear: Every idea is bad until it meets reality.
“Your job is not to be right. Your job is to find out what’s right, fast.”
That means:
- Run quick and cheap experiments
- Don’t fall in love with your idea
- Talk to real customers early and often
This mindset saved Netflix. It also saved Marc from chasing bad ideas for too long.
🤝 Great Startups Need Complementary Founders
Marc and Reed couldn’t have been more different:
- Marc: Marketing-driven, intuitive, people-first
- Reed: Analytical, systems-focused, and precise
But together? They made tough decisions, held honest conversations, and knew when to step aside.
Marc eventually handed over the CEO role to Reed—not because he failed, but because he knew Reed was the right person to scale the business.
“Leadership means knowing when you’re not the right one anymore.”
🧱 Culture Isn’t a Poster—It’s How You Act
Netflix’s culture of “freedom and responsibility” sounds catchy. But it wasn’t just a slogan.
- No micromanaging
- No dress codes or vacation tracking
- Only hire people you trust to act like grownups
It worked because leadership modeled it. Culture isn’t what you say—it’s what you do every day.
If you’re working toward freedom in your own life—through side hustles, passive income, or financial independence—here’s a tool to stay on track:
👉 Subscribe to Refind Ads
📰 Curated money and investing insights. No fluff. Just the good stuff.
✅ Don’t forget to confirm your email—it supports Hedgehog Huddle and unlocks full access!
❤️ Real Success Isn’t Just Business Wins
Marc made it a rule to go on weekly date nights with his wife—even during the chaos of building Netflix.
He carved out time for family and outdoor adventures, knowing that without balance, burnout was inevitable.
“Hard work is necessary—but it’s not sufficient.”
Startups are hard. Side hustles are hard. But if they steal your life, what’s the point?
That’s why I always tell readers: learn smart, earn smarter. Don’t grind yourself into dust.
✨ Learn all the different ways of earning income and decide what works best for you.
Inaction and procrastination are the only things that guarantee you’ll stay exactly where you are.
🧠 Want to grow your portfolio into a passive income machine?
MaxDividends delivers real portfolio updates, top dividend ideas, and income-building roadmaps every week.
👉 Subscribe to MaxDividends — your first week is free, and the value typically far outweighs the cost.
📘 Bonus Read: That Will Never Work by Marc Randolph
Want to go deeper into the mindset behind Netflix’s origin story?
Marc Randolph’s autobiography, That Will Never Work, is a raw, engaging look at how Netflix was born—from failed ideas and near-bankruptcy to its game-changing subscription breakthrough.
It’s packed with honest lessons about risk, rejection, and building something out of nothing—perfect for anyone starting a business or craving a more entrepreneurial life.
👉 Grab That Will Never Work on Amazon — a must-read for future builders and bold thinkers.
📦 Your purchase also supports the Hedgehog Huddle community. Thank you!
Final Thought
Netflix wasn’t built overnight. It wasn’t built from a genius idea either.
It was built from hundreds of bad ones, tested by people who were honest enough to admit they didn’t have all the answers—and brave enough to keep going anyway.
If you’re starting small, feeling stuck, or doubting your ideas…
Remember: It’s not about being right. It’s about finding what works.
Stay sharp, stay spiky — be the hedgehog with a strategy
— Mindy
Founder, Hedgehog Huddle