5 Lessons From This Netflix Early Investor

reed hastings
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Within two decades of existence, strategic choices have transformed Netflix from a simple DVD rental service to the flourishing, multifaceted business that it has become.

According to early investor Mike Schuh, who spoke to CNBC, the success of Netflix can be attributed to CEO and founder Reed Hastings’ visionary leadership. Other companies could derive at least 5 lessons from the venture and apply them to their own business model.

mike schuh
Netflix CEO Reed Hastings | Catwalker | Shutterstock.com

Given their systematic rise to far-reaching success, we feel that other companies could derive at least 5 lessons from the Netflix venture and apply them to their own business.

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Five Lessons From Netflix Early Investor Mike Schuh:

1. Perseverance to win the Race

It wasn’t all moonlight and roses for Netflix in the beginning, having to face stiff competition from companies that preceded it in a market with surprisingly few available customers (about one million households in 1998 used DVD and the Internet–the ideal Netflix customer).

That was the case with Blockbuster that, after passing on the chance to purchase Netflix for only $50 million USD, tried to oust the burgeoning startup from the scene by spending hundreds of millions of dollars.

“The price competition with Blockbuster could have destroyed us,” Schuh told CNBC.

2. Recruiting the Right Talents, Like Reed Hastings

Getting the right people in the right place according to the company needs is stacking the odds in its favor, even when the obvious gamble of investment dollars seems like an obvious loss.

That’s what Netflix has been doing, setting the environment conducive to success and growth. As an investor, Schuh wasn’t fully satisfied with the company’s inner workings, but he stayed the course because of what he saw out of Reed Hastings and his team.

3. Anticipating Business Developments

Any past success raises the bar for what is to come.

To bring Netflix to a safe harbor, Hastings had to have a vision and be open to new ideas. Anticipating future challenges doesn’t only mean being ready to face them, it also means enabling unseen opportunities to unfold.

Kevin Spacey and Robin Wright of the hugely popular Netflix Original House of Cards | Featureflash Photo Agency

Thinking outside of the box helped shift from mail-service renting DVDs to streaming, then producing its own original TV series, documentaries, and films that are both critical and commercial successes.

4. Know When to Backpedal

This ties in with the previous point.

Knowing when to abandon a bad idea is as important for a company’s success as pursuing a good one. In parallel with successful endeavors that need a push, it takes skills and courage to stop unfruitful projects immediately.

That worked for Netflix, and it’s true for any kind of business.

5. Embrace Change

Had Netflix stuck to its pay-as-you-rent business model, it would have taken over by competition, or at least, wouldn’t achieve its present status.

Riding the wave of the Internet back in the late 1990’s, Netflix changed its course and introduced the new service of monthly subscriptions with unlimited DVD rentals. Making a major change can look daunting and uncertain, but can prove to be very rewarding in the long run.

As Schuh said, “The value proposition was you go online, you order a movie, it arrives by mail, you watch it for as long as you want and mail it back. Although it seems fairly straightforward today, it made people shake their heads.”

Not all change is embraced right away, and that’s why you practice perseverance while knowing when to backpedal.

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