Santa Cruz Tech Beat

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Q&A: Marc Randolph talks about Santa Cruz, Reed Hastings, and the birth of Netflix

By Sara Isenberg
Founder, Publisher, Editor-in-Chief
Santa Cruz Tech Beat

September 17, 2019 — Santa Cruz, CA

(Photo above: Marc Randolph, co-founder and first CEO of Netflix, is also a board member at Looker. Contributed.)

A Santa Cruz Story

Today marks the release of Marc Randolph’s book, That Will Never Work — The Birth of Netflix and the Amazing Life of an Idea. The publisher writes, “In the tradition of Phil Knight’s Shoe Dog comes the incredible untold story of how Netflix went from concept to company – all revealed by co-founder and first CEO Marc Randolph.”

We all know how Netflix has changed the course of movie-watching  but you might not know that the birth of Netflix is a very Santa Cruz story.

Fortunately, Marc, who still calls Santa Cruz home, agreed to share with me some of the local intrigue related to the startup days of Netflix. (Also, be sure to check out the video below, direct from Marc.)

SCTB: What’s your personal connection to Santa Cruz and what is Netflix’s early connection to Santa Cruz?

MR: My wife and I moved to Santa Cruz county in 1988, a date that is fairly easy to remember since shortly after moving to the area, we put a down payment on a house in Aptos which, while still in escrow, the ’89 earthquake knocked off it’s foundation. It didn’t pass inspection.

I had moved to the area to take a job with Borland, but 7 years later when we sold off the Borland division I was running, I became one of the 19,000 daily economic migrants over-the-hill to The Valley. I continued to live in Santa Cruz county (in Ben Lomond, actually). So when several years later – in 1997 – I decided to do another startup, my first thought was “this time I’m going to do it close to home.”

SCTB: Reed Hastings is also a Santa Cruz resident. (My son went to school on the westside of Santa Cruz with Reed and Patty’s daughter and on occasion our families shared kid chauffeuring duties. And, as it turns out, a few years later, your son and mine played lacrosse on opposing teams in high school.) How did you and Reed first meet? Was there an “aha” or epiphany moment behind Netflix?

MR: In 1996 I was working on a startup in Campbell with two friends, when only 9 months into the company’s history, we were acquired by a company called PureAtria. This was a great outcome in several ways, one of which was that PureAtria had been founded, and was currently being run, by Reed Hastings. Whilst the other members of the company formed a business unit (and were relegated to offices in the basement) I went to work for Reed as his VP of marketing. It was a bonus when we realized we both lived in Santa Cruz, so we began carpooling to work together.

Less than 6 months after I joined PureAtria, lightning struck again, and PureAtria was itself the subject of an acquisition. Whilst economically this was again good news, it had an even brighter side, in that I was going to be laid off. This meant I could now do another startup, so Reed started helping me brainstorm ideas during our car rides back and forth to work.

SCTB: So commuting over 17 does have an upside.

MR: There was no “aha” moment, since we went through hundreds of bad ideas. It was while sitting at an outdoor table at Lulu Carpenters we came up with the idea of doing DVD rental by mail, and instantly decided to test the idea. We strolled down to Logo’s and bought a used music CD, then down to Paper Vision to buy an envelope, than down to the Santa Cruz Post office to mail it all to Reed’s house in Santa Cruz.

If there was ever an aha moment, it was when Reed picked me up to go to work the next day and showed me the unbroken CD that had gotten to his house in less than 24 hours for the price of a first class stamp.

SCTB: Why do you say that you and Reed were “a perfect pair” (like Lennon and McCartney)?

MR: My background is marketing, so I bring an expertise in the emotional elements of starting a business, intuiting what people will want. Reed’s background is mathematics and coding, so he brought an expertise in what could be made possible. But both of us shared a culture of honesty, transparency, and cooperation. Things just worked.

SCTB: Most local tech workers know that Netflix is now located in Los Gatos. Why didn’t you decide to locate Netflix in Santa Cruz? Would you make the same decision if you were starting the company today?

MR: We did locate the company in Santa Cruz. Or more accurately, I decided to locate it in Scotts Valley since that’s where I was living at the time. Our first office was the conference room at the Best Western (now it’s gym). Our first “real” office was in the Granite Creek business park. I was committed to this being a local company, but I miscalculated what happens when a company grows rapidly and needs a skill set that isn’t in great supply in Santa Cruz. One of our board members told me, “you’re already doing something crazy, why locate yourself somewhere crazy as well.”

SCTB: What tidbit or two from the book do you think might be of particular interest to local readers?

MR: That the original validation of the idea took place downtown (there should be a plaque in Lulu C’s) and that we were located in Scott’s Valley for the first 18 months.

SCTB: You’re connected with Looker as a board member. How does your experience at Netflix translate to Looker?

MR: Very directly. I’m not just a board member, in some ways I was Looker’s first employee since I signed on to mentor Lloyd Tabb and Ben Porterfield at the very very beginning. My original title was ABC (which stood for Anything But Coding).

From day one, Lloyd and I were both firmly committed to making sure that Looker was – and stayed – a Santa Cruz company, and having been blindsided once by having a Santa Cruz company pulled away from me, I knew what we had to do to ensure that didn’t happen to Looker.

I’m really proud that Lloyd, Ben, and I were able to pull that off.

SCTB: What are you up to now (aside from writing and releasing this book)?

MR: After Netflix I decided I didn’t have it in me to start another company, but neither was I ready to hang it up entirely, so for the last 15 years, I’ve gotten my start-up fix by mentoring other early stage entrepreneurs and trying to give them the same opportunities that I’ve had. In addition to Looker, I have had a chance to work with dozens of other founding teams. I still get to sit around a table with really smart people, and help solve really interesting problems. But now I get to go home early so I can surf, mountain bike, trail run, or do any of the other things that make Santa Cruz such a wonderful place to live.

SCTB: So Santa Cruz still home.

MR: You betcha! I’m never leaving.


That Will Never Work Meet the Author from Doug Abrams on Vimeo.

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