That Will Never Work

I’ve gotten to know Marc Randolph as a fellow board member at Looker. Marc has helped many companies get off the ground, but the most famous is Netflix. Marc founded the business and served as its first CEO until Reed Hastings took the helm in 2003. In [That Will Never Work](), Marc recounts the early days of the $130B market cap company first started in Santa Cruz and it’s a remarkable story. One in which Redpoint partner Tim Haley has a cameo (Tim led the Series A.)

The book starts out in a car with Marc and Reed commuting together, fighting the traffic on 101 to San Francisco and batting around ideas for new companies. There’s a familiar pattern to these conversations. Marc suggests the idea, and Reed identifies the flaws.

Eventually, Marc and his team identify the concept that will become Netflix. I won’t spoil the details, because the story is riveting, and well worth reading. Marc writes about the origins of the culture of Netflix, one that is held in the highest regards to this day. He writes about the first CD sent through the mail to test if it would work and how he dropped off at the Santa Cruz post office. He brings you back to a time when DVD players were new, and no one had them; and when the movie studios preferred to sell DVDs rather than rent them. And to a time before streaming video. There’s also a really hilarious incident with a Bill Clinton DVD that Netflix sends out for two cents but many customer receive an unexpected surprise.

The part that is the most unusual about this business history is the CEO transition. CEO transitions can be very difficult times in a company’s life and in a CEO/founder’s life. Each one has its own story, its own complications, its own denouement.

“Marc,” Reed started slowly, “I’ve been thinking a lot about the future. And I’m worried.” He paused, trying to read my face. Then he pursed his lips, looking down at the screen like it was a set of cue cards, and continued. “I’m worried about us. Actually, I’m worried about you. About your judgment.”

While the entire book is riveting, this is the chapter that I read and re-read. It may be the hardest moment in a founder’s life. You have founded the business; you’ve gotten off the ground; raised capital; achieved product market fit; are scaling; and then someone comes into your office and says words like these.

I love the honesty and candor in this book. Marc writes clearly about the challenges he faced as a founder and CEO, which takes incredible strength. That Will Never Work is a great book to the annals of Silicon Valley lore.