Marketing 3 min read

Expert Sessions: 5 Lessons From a Netflix Early Investor

Every tech revolution has a Netflix, and investor Mike Schuh saw that potential. Here we go through 5 lessons all investors can learn from his experience.

Redpixel.pl | Shutterstock.com

Redpixel.pl | Shutterstock.com

Within two decades, strategic choices transformed Netflix from a simple DVD rental service to the flourishing, multifaceted business of today.

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.

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. Here are the key lessons all investors should learn:

1. Perseverance to win the Race

It wasn’t all moonlight and roses for Netflix in the beginning. The company had to face stiff competition from companies that preceded it in a market with surprisingly few available customers. In fact, only about one million households in 1998 used DVD and the Internet.

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. Recruit the Right Talents

Getting the right people in the right place stacks the odds in your company’s 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. Anticipate 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 skill 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 no longer exist.

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.

Read More: Netflix is King, but Hulu VR is the Next Big Thing

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Zayan Guedim

Trilingual poet, investigative journalist, and novelist. Zed loves tackling the big existential questions and all-things quantum.

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