Netflix vs. the World

When you're starting a company,

you labor in obscurity for what feels like years.

You tell your friends what you're working on

and they kind of glaze over or don't understand.

No one recognizes the name.

And you wonder, "Who am I doing this for?"

- I think I remember writing 30 different bullet points

about why it wouldn't work.

- At that point, DVDs were a rich man's game.

- Well, the worst thing that can happen

is you divvy up the DVDs and you come home.

- Are we actually gonna make it?

- And he said, "I don't know why you're taking this job.

"They're only shipping 2,000 a day

"and they need to ship 100,000 just to break even.

"That'll never happen."

- At that time, the studios thought,

"Oh, there's gonna be a huge amount of piracy."

- We all believed in it early on, and maybe blindly.

Your parents and your spouse

are looking at you like, "What the...

"Why are you doing this?!"

- He'd say, "Ah, because I believe."

Netflix began mailing DVDs

in those red envelopes back in 1997.

Today, it brags about being

the world's leading internet television network.

- The company better known for renting and streaming movies

is offering TV viewers a whole new way

to enjoy first-run shows.

And the Oscar goes to "Icarus",

Bryan Fogel and Dan Cogan.

- Thanks to Ted Sarandos, Lisa Nishimura, and Adam Del Deo,

our incredible partners at Netflix.

And the Oscar goes to...

"Roma"!

- Streaming giant Netflix won big at the Oscars last night,

with its film "Roma"

taking home three of the golden trophies.

- Well, and it's changing Hollywood.

I mean, look what happened, Disney and Fox.

Their studios won a lot of awards last night.

They're merging because Disney's about to launch

their own streaming service

that they're hoping is gonna compete with Netflix.

And Apple, in the next few weeks,

they're gonna launch their own streaming service.

As we approach the 21st century,

a new means of communication is emerging.

One day, we will all be connected to the internet.

- When I was at Berkeley in the '80s,

I had a roommate who was a

computer science guy and he said,

"Okay, hey, Corey, you've got a Mac, you've got a modem.

"Let me show you this thing called the internet.

"Whatever your weird-ass little

hobby or favorite things is,

"you're gonna find 2,000 other people

"who love that same thing," and that was hugely powerful.

- In 1981, only 213 computers were hooked to the internet.

As the new year begins, an

estimated 2.5 million computers

will be on the network,

serving as many as 20 million people.

- Back in the olden days before the internet

and technology companies created instant millionaires,

companies, publicly traded companies,

were judged on old-fashioned metrics

of profitability and reliable returns.

And Netscape really sort of reset investor expectations

and really marked the beginning

of the dot-com boom era.

- Has the 1990s boom shattered old assumptions

about how the economy works?

The internet evolved

into a commercial phenomenon.

Since 1991, the economy has expanded

in what's about to break the record

as America's longest boom.

- And it really did mark the beginning

of Silicon Valley's first wave of investment speculation.

Investors were drawn to the market,

not necessarily by underlying market fundamentals,

but rather by the promise or the promise of a technology.

- At least at the time, it was so nuts working at Netscape

that we had financial advisors sending out alerts saying,

"Listen, if you've got a Netscape bumper sticker

"on your car, take that off

"because people are jumping in front of vehicles

"because they assume that it's billionaires driving 'em

"and people are looking for payouts."

- Some of these celebrities of the tech industry

sort of distilled what American

culture loves the most:

youth and brashness.

Nerdy dudes who might have struggled

to get a date in high school were suddenly rock stars

in the eyes of the media world.

Jeff Bezos was finding himself

on the front page of the Wall Street Journal.

- Was that initial excitement all just a fictitious,

if thrilling, children's story?

Or is the next chapter for Steve Jobs

likely to be his gaudiest?

- He was in disgrace in Silicon Valley.

He'd been booted from his own company

and he had received a call from an old friend of his,

George Lucas at Pixar.

George was going through a divorce

and needed to raise some money pretty quickly,

so he actually went and met with Lucas

and saw some promise in the technology

that Pixar was cultivating.

At the time, it was just animating commercials,

but he saw that there was the opportunity for storytelling

and for him to make his mark in Hollywood.

When Toy Story came out,

Toy Story was treated like a foreign object

more than a precious

here's-a-precursor-to-the-future.

- I think it is fair to say that Hollywood was blindsided

by the success that was Toy Story,

its enormous box office performance.

Well, you know, Toy Story

has really exceeded our expectations.

It's about $180 million right now,

I think, in domestic box office.

It's being released internationally as we speak.

- Yeah, well, if you hadn't shown up

in your stupid little cardboard spaceship

and taken away everything that was important to me...

- Don't talk to me about importance.

Because of you, the security of this entire universe

is in jeopardy. - What?!

- I would argue that Woody, the cowboy,

and Buzz, the brash space explorer,

they were sort of emblematic

of Silicon Valley and Hollywood,

which needed one another,

but were apprehensive about one another.

- So, the Netflix story actually,

as most of these stories do,

begins quite a distance in the past.

Back in the early days,

Marc actually worked for Reed Hastings

at a company called Pure Atria.

- Reed also lived where I lived, lived in Santa Cruz.

And a bunch of us every day would carpool to work.

So, not only was I working for Reed,

but also I was getting to know him reasonably well

in this one-hour commute each direction

from Santa Cruz over to Sunnyvale.

- Marc called me one night and he said, "Listen, Christina,

"I have found this great company.

"We're gonna do corporate marketing.

"It's gonna be 9-to-5.

"Come have fun."

And I right away said yes.

Five days later, he said, "I have some news."

- Our big software company was acquired

by an even bigger company.

I didn't get a job with the new company.

I was fired.

And a smile here because I was fired

in that wonderful kinda Silicon Valley

golden handcuff-sy kinda way.

And what happens in that case is they come to you and say,

"Marc, we're no longer gonna need your service,

"but you need to stick around for maybe six months

"helping us figure this out in case we have a question."

And I go, "That sounds actually pretty good to me."

And I said, "I am delighted.

"I'm gonna actually use this opportunity

"to start my next company."

And Reed, he was being made redundant.

But unlike me, Reed said,

"I don't think I wanna start another company."

Reed, I believed, really wanted to try and change

the world of education.

But once an entrepreneur, always an entrepreneur.

Reed said he wanted to keep his hand in, so to speak.

- So, Reed called me in to Marc's office

and Reed looked and said, I'm gonna be your angel.

I'm giving you $2 million to start a company.

This is back in 1996-97.

The internet was still in its infancy then,

but people were starting to experiment

with selling things over the internet.

- At that point in time, the only thing on the internet

was entertainment, finances, shopping.

Amazon was not even two years old.

And so, we started looking at big markets,

and Marc was particularly interested

in what was going to shift.

And so, we started looking at

all the brick-and-mortar businesses.

The day-to-day reality of actually how this ideation

and then validation happened is it would happen in the car.

Reed and I had an hour ride to Sunnyvale every day

and then we had an hour ride back.