Was Netflix founded because its CEO was afraid of his wife?

Was Netflix founded because its CEO was afraid of his wife?
Was Netflix founded because its CEO was afraid of his wife?

Fifteen years ago today, Netflix went public. But how its co-founders came up with the idea for the revolutionary entertainment service has yet to be clarified.

Originally, CEO Reed Hastings told The New York Times that he got the idea for Netflix after video club chain Blockbuster charged him $40 for a late return of a videotape of the movie “Apollo 13.”

“The tape had failed. It was my fault” he will say.

His problem, though, was that he didn’t want to face his wife if he confessed to her that this little oversight of his had cost them $40.

“I didn’t want to tell my wife. Later, as I was going to the gym, I realized that they had a much better business model there. You could pay $30 or $40 a month and work out as little or as much as you wanted.”

This idea formed the basis for Netflix, which Hastings founded with entrepreneur Mark Randolph on August 29, 1997.

Of course, co-founder Mark Randolph, who left the company in 2002, said Reed’s story was a “convenient fiction” to explain why the company was better than its competitors, according to CNET.

Instead, Randolph claims the company started when he and Hastings decided they wanted to create “the Amazon.com of a certain kind” in 1997, the Washington Post reported. They decided to sell DVDs because customers were willing to buy them online and it was easy enough to mail them. First they mailed a CD to see if it would hold up. When the whole thing arrived at the recipient, they decided to start Netflix.

The history of Hastings has changed a few times. At the Mobile World Congress in Barcelona, ​​he said the idea came from a math problem about the bandwidth of a station wagon carrying movies. To solve the problem, a person would have to calculate how many tapes could fit inside the vehicle, how much data the tapes could hold, and how fast the car could get to a certain destination.

Photo: Wikimedia Commons

That led Hastings to think about how much data a DVD could hold and how quickly that information could be spread through the mail, he said. Ultimately, he thought, the internet would make it possible to deliver things even faster.

Hastings has always praised the internet. In an article for Inc. in 2005, he said the company was preparing for an Internet-based future, though he also said he believed Netflix still had at least a decade to dominate DVD. The company introduced streaming content in 2007, just two years after the article was published.

“Internet movies are coming and at some point they’re going to be big business,” he told Inc. at the time. “We’ve started investing 1% to 2% of revenue every year in downloading, and I think that’s really exciting because it’s going to radically reduce our shipping costs. We want to be ready when video-on-demand happens. That’s why the company is called Netflix and not DVD-by-Mail.”

And in the same Inc. article, Hastings admits there’s no fancy back story.

“Netflix was originally just a rental service, but the subscription model was one of the few ideas we had — so there wasn’t an ‘aha moment!'” he said.

The article is in Greek

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