Latest / The David Rubenstein Show / Ted Sarandos

Transcript

Ted Sarandos · The David Rubenstein Show

0:02
Speaker 1: One of the most valuable entertainment companies in the world
0:04
Speaker 1: and one of the most popular entertainment companies in the
0:06
Speaker 1: world is Netflix. It currently has more than two hundred
0:09
Speaker 1: and seventy five million subscribers.
0:11
Speaker 2: I recently had a chance in Washington, d C.
0:13
Speaker 1: To sit down with the co CEO of that company,
0:16
Speaker 1: Ted Surrandos, and ask him how he got started this
0:18
Speaker 1: company from a very modest background, and how he now
0:21
Speaker 1: sees the future of Netflix. So, when you joined Netflix
0:25
Speaker 1: in two thousand, the company was about three years old
0:28
Speaker 1: but relatively small. Did you ever in your wildest dreams
0:32
Speaker 1: imagine the company would be one of the most valuable
0:34
Speaker 1: companies in the world and you would have today a
0:37
Speaker 1: market value of over three hundred billion dollars.
0:40
Speaker 3: The short answer to that question is no. I think
0:43
Speaker 3: when we joined we had a couple hundred people, including
0:46
Speaker 3: the people who are stuffing DVD envelopes. Back then, Blockbuster
0:51
Speaker 3: was the biggest entertainment brand in the world, with a
0:54
Speaker 3: market gap of about eight billion dollars. They were definitely
0:57
Speaker 3: the biggest in terms of global footprint. I mean, most
1:01
Speaker 3: people watch their movies renting a DVD from Blockbuster, and
1:04
Speaker 3: at eight billion, that seemed almost unattainable when we went
1:08
Speaker 3: public in two thousand and two, about two hundred and
1:10
Speaker 3: fifty million.
1:10
Speaker 1: So for people who were too young to remember, this,
1:12
Speaker 1: Blockbuster was a place where you go to buy something
1:15
Speaker 1: called a DVD, yes, and you went there, you rented them,
1:19
Speaker 1: and then you put them back on your VCR, and
1:21
Speaker 1: then you after a couple of days, like a library book,
1:23
Speaker 1: you bring it back and so forth. The novelty that
1:26
Speaker 1: Netflix had when it first started in nineteen ninety seven,
1:29
Speaker 1: as I recall, was that you didn't have to go
1:31
Speaker 1: to a Blockbuster. You could order something I guess online
1:34
Speaker 1: and then you would have it sent to you by
1:36
Speaker 1: a FedEx or equivalent kind of company.
1:38
Speaker 3: Right through the US mail okay ESPs.
1:40
Speaker 1: So who came up with the idea of saying, well,
1:43
Speaker 1: FedEx is a little old and mailing is old, and
1:45
Speaker 1: we want to go to streaming. Who was the brilliant
1:47
Speaker 1: person that came up with that idea?
1:49
Speaker 3: You know, the company was always conceived to be a
1:51
Speaker 3: digital company, read Hastings. When he came up with this idea,
1:55
Speaker 3: he was thinking about it very much. So when he
1:57
Speaker 3: named the company even he called it Netflix, not DVD Flix,
2:00
Speaker 3: and this idea. When I met Reid in nineteen ninety nine.
2:03
Speaker 3: He describes Netflix pretty much like it is right now.
2:07
Speaker 3: And this was at a time when no literally no
2:11
Speaker 3: entertainment was coming into the home on the internet, and
2:13
Speaker 3: he described a world where all home entertainment would come
2:17
Speaker 3: in on the internet.
2:18
Speaker 1: So when streaming came along, the theory was that people
2:22
Speaker 1: would be willing to pay let's say a monthly subscribing rate,
2:25
Speaker 1: right and that they would see programming they couldn't otherwise
2:28
Speaker 1: easily get. But the idea of doing your own program
2:32
Speaker 1: it was relatively novel. Now you are seen as the
2:34
Speaker 1: person who came up with the idea of not just
2:37
Speaker 1: taking stuff that's already out there, the one hundred thousand
2:39
Speaker 1: things that might already be available, but producing your own
2:42
Speaker 1: programming for Netflix.
2:43
Speaker 2: So where'd you get that idea from?
2:45
Speaker 3: So in the very beginning, we didn't really think much
2:47
Speaker 3: about doing original programming because it wasn't the problem we
2:49
Speaker 3: were trying to solve. The problem was really distribution and
2:53
Speaker 3: how to you in the consumer relationship with how to
2:55
Speaker 3: watch a movie? You go to the video store, you
2:58
Speaker 3: rent it, you return it, you pay a light fee
3:00
Speaker 3: if you're late, and it was a very clunky way
3:02
Speaker 3: to distribute things in this way, the subscription revenue, the
3:05
Speaker 3: subscription model gave the people the ability not to ever
3:09
Speaker 3: have a late fee. They could kind of pick and
3:11
Speaker 3: choose that however they wanted things. So we were solving
3:14
Speaker 3: a distribution problem one and the other one was maybe
3:17
Speaker 3: a bigger problem, which was marketing. It's incredibly inefficient to
3:22
Speaker 3: market movies and TV shows to people because tastes are
3:25
Speaker 3: so diverse and so eclectic that in order for me
3:28
Speaker 3: to tell you about a movie that I think you
3:29
Speaker 3: might like, I probably have to take out an ad
3:31
Speaker 3: in the newspaper and tell the whole city about it
3:33
Speaker 3: and hope that you see it.
3:35
Speaker 1: So the industry lore is that you got this off
3:39
Speaker 1: the ground by agreeing to pay one hundred million dollars
3:42
Speaker 1: to a new show that had not actually showed.
3:45
Speaker 2: There was House of Cards, Plow. It was a lot
3:47
Speaker 2: like real estate. It's all about location, location, location.
3:51
Speaker 1: And it had not produced a single anything yet, but
3:54
Speaker 1: it was a concept. When you told read Hastings, I
3:57
Speaker 1: guess what, I just spent one hundred million dollars to
3:59
Speaker 1: buy something and exists.
4:00
Speaker 2: Yet did he say great idea?
4:02
Speaker 3: No? He was a little surprised, but when I explained
4:06
Speaker 3: it to him, he was very supportive of it immediately.
4:09
Speaker 3: You have to remember, recreated this company culture that enabled
4:12
Speaker 3: me to take a big swing like that, and for me,
4:15
Speaker 3: I looked at it as a kind of classic risk reward. Yes,
4:18
Speaker 3: this is a lot of money. If this doesn't work,
4:21
Speaker 3: we will have dramatically overpaid for a show, which we
4:25
Speaker 3: kind of at risk of doing all the time. But
4:27
Speaker 3: if it does work, we could fundamentally change the course
4:30
Speaker 3: of the business.
4:30
Speaker 2: If it didn't work and you think you might be
4:32
Speaker 2: out of a job.
4:33
Speaker 3: I told I prepared my wife that it was a possibility.
4:37
Speaker 3: She said, she said, will you get fired to this?
4:38
Speaker 3: Other one guy said, well, it's fireable, it's firerable.
4:41
Speaker 1: There's another idea that you were credited with and I
4:44
Speaker 1: think correctly with coming up with, which is called binge watching.
4:47
Speaker 2: I guess I could call it. I don't know if
4:49
Speaker 2: you like that word.
4:50
Speaker 1: Didn't initially, Okay, So I understand binge watching. And this historically,
4:55
Speaker 1: when there was a TV series on, you watched a
4:57
Speaker 1: series episode one week, the next week, you watch the
5:01
Speaker 1: second one next week. So on you came up with
5:03
Speaker 1: the idea of having are the ability to watch everything
5:06
Speaker 1: right at once, more or less binge watching, as they
5:08
Speaker 1: call it. Did you come up with that idea or
5:10
Speaker 1: did it evolve some way, or how did it come about?
5:13
Speaker 3: It was pretty heavily informed by what people were doing
5:15
Speaker 3: back in the back in the earliest days on DVD,
5:18
Speaker 3: I noticed that we'd have disc that would have four
5:20
Speaker 3: episodes of a show on it, and they would turn
5:23
Speaker 3: very fast because people were churning through the show as
5:26
Speaker 3: quick as they could. And then when we started streaming,
5:29
Speaker 3: we were licensing shows that had already aired on television,
5:31
Speaker 3: so we got them a year later, but we got
5:33
Speaker 3: the whole season and we just put it all up,
5:35
Speaker 3: so we on a notice, when you're watching, some people
5:38
Speaker 3: watch two episodes at a time, some people watch three.
5:40
Speaker 3: Nobody watched one. So when we got how came to
5:43
Speaker 3: House the cards, we had to decide how to release it,
5:45
Speaker 3: and I said, well, don't we just put it like
5:47
Speaker 3: the other thousands of things on Netflix and do it
5:49
Speaker 3: all at once and see what happens.
5:51
Speaker 2: Now.
5:51
Speaker 1: Sometimes in the business world, particularly the technology world, somebody
5:54
Speaker 1: might have a great idea and they have an advance
5:57
Speaker 1: on somebody for maybe two years or so, and then
5:59
Speaker 1: everybody else figures out what they should be doing, and
6:01
Speaker 1: they catch up, and sometimes they have more resources than
6:03
Speaker 1: they beat the original person who came up with the concept.
6:06
Speaker 1: Were you worried that programmers like our companies had programming
6:09
Speaker 1: like Disney would figure out streaming and then wipe you out?
6:12
Speaker 2: Or you never were worried about that.
6:14
Speaker 3: No, always worried about that. We couldn't believe it took
6:16
Speaker 3: so long for them to catch up to it. In fact,
6:19
Speaker 3: as one of the motivators to make our own content
6:21
Speaker 3: was I was pretty sure that if we were right,
6:24
Speaker 3: that all of these people who are supplying us their
6:26
Speaker 3: old shows would never sell to us.
6:27
Speaker 1: When you started producing shows and making your own shows,
6:30
Speaker 1: did you become the most popular person in Hollywood? Because
6:34
Speaker 1: all of a sudden somebody has somebody who can green
6:36
Speaker 1: light something and so could you go out to dinner
6:39
Speaker 1: or lunch without having people descend upon you with scripts
6:42
Speaker 1: and so forth?
6:43
Speaker 2: How did you deal with all that?
6:44
Speaker 3: Yeah, it was heavy because we were a new buyer
6:46
Speaker 3: is very popular in town so and I would say
6:49
Speaker 3: that it was never limited just to business hours. So
6:51
Speaker 3: if you're out at a restaurant with my wife and
6:53
Speaker 3: someone would come in and start pitching away at the table.
6:56
Speaker 3: Somebody tells these people in film school, if you ever
6:59
Speaker 3: see a buyer anywhere, sell to them?
7:01
Speaker 1: Does that ever work there? But you ever never went
7:03
Speaker 1: to nobody came up and lunch. But an idea that
7:05
Speaker 1: you're actually.
7:06
Speaker 3: I can't think of one.
7:08
Speaker 1: You know, there's been a lot of consolidation in recent
7:10
Speaker 1: years in the entertainment world. You know, Time Warner was
7:14
Speaker 1: sold in effect, and then you've got Powamount.
7:16
Speaker 2: Now being sold.
7:17
Speaker 1: Is all of this good for you because there's consolidation
7:20
Speaker 1: and then you have fewer people to compete it with.
7:21
Speaker 1: Or is it not so good because you have more
7:23
Speaker 1: powerful people that can compete against you.
7:25
Speaker 3: Yeah, a little bit of both. So I think it's
7:27
Speaker 3: competition has been very good people. I usually don't talk
7:30
Speaker 3: about other people's shows publicly, but like people. As someone
7:34
Speaker 3: asked me recently, what's the show that's not on Netflix
7:36
Speaker 3: that you like? And I said The Bear. And the
7:38
Speaker 3: reason I talk about the show is because I think
7:40
Speaker 3: it raises the bar for everybody. So I think you
7:43
Speaker 3: have one competition out there to keep you push, to
7:45
Speaker 3: keep pushing you.
7:46
Speaker 1: But the consolidation won't occur by your buying one of
7:48
Speaker 1: these major studios, because that's not in your house of
7:51
Speaker 1: cards kind of thing.
7:52
Speaker 3: This is not in our DNA because they were most
7:54
Speaker 3: mostly builders. We had done a few a handful of
7:58
Speaker 3: small IP inquisitions over the years, and that may change
8:01
Speaker 3: over the next in the next few years, but for
8:04
Speaker 3: now we're trying to without the I would say a
8:08
Speaker 3: big library of IP can be a really nice benefit
8:11
Speaker 3: for us. That's really been a benefit not to have it,
8:13
Speaker 3: because it's got it's pushed us to make really original,
8:16
Speaker 3: creative things and not to stay corralled into one pool
8:20
Speaker 3: of IP. And we're spending about seventeen billion dollars on
8:23
Speaker 3: our programming and as our revenue grows, well, that number
8:26
Speaker 3: will keep growing because we do think that there's an
8:29
Speaker 3: incredible appetite for more movies and more TV shows that
8:32
Speaker 3: people love now on.
8:33
Speaker 1: A few years ago, there was a writer's strike in Hollywood,
8:36
Speaker 1: and one of the issues before it got resolved is
8:38
Speaker 1: how you deal with artificial intelligence. How do you prevent
8:42
Speaker 1: artificial intelligence from taking over what writers do, and how
8:45
Speaker 1: do you compensate them when artificial intelligence does something that
8:48
Speaker 1: adds to what they've already done. So is artificial intelligence
8:51
Speaker 1: important part of your business now? And how do you
8:53
Speaker 1: use AI and deciding what to produce and how to
8:55
Speaker 1: produce it?
8:57
Speaker 3: For me, I really mostly think of AI as a
8:59
Speaker 3: create wars tool, not a creative tool. So I think
9:02
Speaker 3: creators will use it to make to tell better stories.
9:05
Speaker 3: We're not using it to tell stories instead of them,
9:08
Speaker 3: And I don't think and I don't think we'd be
9:10
Speaker 3: very effective at it, or AI would be very effective
9:12
Speaker 3: at doing that instead of people.
9:14
Speaker 1: So when you put something on Netflix, you can analyze
9:18
Speaker 1: within an hour or so or maybe ten minutes, whether
9:21
Speaker 1: people are watching it. And do you get those kind
9:23
Speaker 1: of data algorithms that show you exactly how much people
9:27
Speaker 1: like it? And do you actually change things after you
9:29
Speaker 1: see what people like, or how do you deal with
9:32
Speaker 1: the instant feedback you get?
9:33
Speaker 3: What I'm really looking for is if they watch episode one,
9:36
Speaker 3: do they roll in episode two? And if they do two,
9:38
Speaker 3: do they get to three? And how much time are
9:40
Speaker 3: they spending. We're in a really unique place in entertainment
9:44
Speaker 3: history right now where every time you release a new
9:46
Speaker 3: movie or a new TV show, you are used to
9:49
Speaker 3: only compete with three other shows on three other networks
9:52
Speaker 3: today you compete with every single thing ever made, and
9:55
Speaker 3: one click away you could just switch to something else.
9:58
Speaker 3: So you want to watch these things? Are people? If
10:00
Speaker 3: if you push play, do you stick around? That to
10:03
Speaker 3: me is the biggest indicator of do we do it right?
10:05
Speaker 1: So let's talk about today where Netflix says today you
10:09
Speaker 1: have how many subscribers.
10:11
Speaker 3: Two hundred and seventy seven million subscribers, So you figure
10:16
Speaker 3: a couple of people per household watching, You've got about
10:19
Speaker 3: a viewership now over five hundred million people.
10:21
Speaker 1: So two hundred and seventy seven million subscribers are more
10:25
Speaker 1: than half in the United States, or.
10:26
Speaker 3: About seventy percent from outside the United.
10:28
Speaker 1: States, seventy percent outside What is the second biggest country
10:32
Speaker 1: out of the United States.
10:33
Speaker 3: Well, we report by territory, by regions, so Amia is
10:38
Speaker 3: the second largest outside of the United States, but we're
10:40
Speaker 3: very big in the UK and Brazil.
10:43
Speaker 1: So for twenty plus years or so, your subscriber numbers
10:46
Speaker 1: went up every month, it seems, without fail. And then
10:49
Speaker 1: one month, I think you announced in a quarterly earnings
10:51
Speaker 1: that actually subscribers went down a little bit. All of
10:54
Speaker 1: a sudden, the world took a large part of your
10:56
Speaker 1: market capitalization away. Were you shocked that people were so
10:59
Speaker 1: upset about the fact that you lost a few subscribers
11:02
Speaker 1: compared to where they thought you should be.
11:03
Speaker 3: Probably the magnitude of it was shocking, because we knew
11:06
Speaker 3: the fundamentals of the business were intact and fine. It
11:09
Speaker 3: just you had a whip saw effect from covid. There
11:12
Speaker 3: are a lot of things that were happening that we're
11:14
Speaker 3: still trying to figure out. But it was a kind
11:16
Speaker 3: of a temporary blip, but it was it was. It
11:18
Speaker 3: was a hard thud.
11:20
Speaker 1: But your market cap has come way back and higher
11:22
Speaker 1: than it's ever been right currently, and so that blip
11:26
Speaker 1: was not a big problem, I guess. But one of
11:28
Speaker 1: the things you did that also upset people for a
11:30
Speaker 1: while was you said you can't use your past code
11:35
Speaker 1: to give it to somebody else, and not historically, as
11:37
Speaker 1: I understand it, somebody could say to his friend, I
11:40
Speaker 1: have a pass code for Netflix, why don't you use it?
11:43
Speaker 1: And I assume I was taking revenue away from you.
11:45
Speaker 1: And how did you figure out how big that problem was,
11:47
Speaker 1: and how did you have the courage to say, you
11:49
Speaker 1: know more of that and not worry that people were
11:51
Speaker 1: going to get rid of their Netflix subscription.
11:53
Speaker 3: Well, we had it was a couple of times. One
11:56
Speaker 3: was revenue, but the other part of it was this
11:59
Speaker 3: personalization helping you find something to watch works better if
12:02
Speaker 3: you don't have five or six different people using your account.
12:05
Speaker 3: So for us, it was a really a way to
12:07
Speaker 3: really hone in with the personalization technology, but also a
12:10
Speaker 3: way to kind of test the value proposition. If you've
12:13
Speaker 3: got our average members are watching about two hours in
12:15
Speaker 3: Netflix every day. So basically when you go back out
12:19
Speaker 3: to people and say, hey, you know that thing that
12:20
Speaker 3: you're using for two hours a day and not paying for,
12:23
Speaker 3: we'd like you to get your own account. And what's
12:25
Speaker 3: turned out nicely about that is most people say, yeah,
12:27
Speaker 3: that's well worth it for me to do that.
12:29
Speaker 1: Now, when I had my company and I was the
12:30
Speaker 1: co CEO of it, I had a co co who
12:33
Speaker 1: I started the company with, so we got along well,
12:35
Speaker 1: we had different responsibilities and it worked out reasonably. Well,
12:38
Speaker 1: you have a co CEO, let me talk about initially
12:41
Speaker 1: you are the company was started by Reid Hastings and
12:43
Speaker 1: he asked you to be the co co Were you
12:45
Speaker 1: surprised that a founder of a company took somebody who
12:47
Speaker 1: had been employee and made him the co CO was
12:50
Speaker 1: out a surprise to you.
12:51
Speaker 3: It was a surprise. It would be a shock if
12:53
Speaker 3: I didn't know Read that well at the time, because
12:55
Speaker 3: I back to my first time I met Read in
12:57
Speaker 3: ninety nine. He did talk about this desire to build
13:00
Speaker 3: a company that would be around decades and centuries after him,
13:04
Speaker 3: so he foresaw some kind of succession already. So I
13:09
Speaker 3: believe that Reid saw this succession that we just went
13:11
Speaker 3: through recently fifteen years ago, and started acting on it
13:15
Speaker 3: twelve years ago, and which is very unusual. I think
13:18
Speaker 3: your point, as you point out, for a founder, but
13:20
Speaker 3: for somebody who really is thinking about the company first
13:22
Speaker 3: and the longevity of a company first. He's been amazing
13:25
Speaker 3: about that.
13:25
Speaker 1: So he stepped back. He's executive chairman now, not involved
13:28
Speaker 1: day to day. But when he stepped back, did you say, well,
13:30
Speaker 1: now I should be the sole CEO, or did you
13:34
Speaker 1: say I want to co CEO? In addition to what
13:36
Speaker 1: you know my own responsibile I.
13:38
Speaker 3: Think in classic Read fashion, he modeled something that really worked,
13:42
Speaker 3: and we did it together for a few years, so
13:44
Speaker 3: I really got the sense of how well it works.
13:47
Speaker 3: I think Greg Greg and I read and I worked
13:49
Speaker 3: together for more than twenty years, and Greg and I
13:51
Speaker 3: worked together for about fifteen years. So we had the same,
13:53
Speaker 3: very similar shorthand we had complimentary skill sets, I believe,
13:57
Speaker 3: and we push each other in a healthy way. And
14:00
Speaker 3: what's cool about having a co ceo? You know, there's
14:04
Speaker 3: saying you know, usually sayings are rooted in reality, it's
14:07
Speaker 3: lonely at the top. I think there's something to that.
14:09
Speaker 3: And having somebody to be able to kick around hard
14:12
Speaker 3: problems with that isn't an employee or a board member
14:16
Speaker 3: is really helpful.
14:17
Speaker 2: Tell us about your background. Where were you born.
14:19
Speaker 3: I was born in Long Branch, New Jersey. Was there
14:24
Speaker 3: for a few years and my family moved to Phoenix, Arizona.
14:26
Speaker 3: I was raised in Phoenix.
14:27
Speaker 1: That's what in those days was out on usual ago
14:30
Speaker 1: from New Jersey to Arizona. Why do they move to Arizona.
14:33
Speaker 3: It's a great story. My grandfather, who was a Greek immigrant,
14:37
Speaker 3: grew up reading cowboy novels. When he actually when he
14:41
Speaker 3: came to America, he came to be a trail cook.
14:44
Speaker 3: He thought that was a real job in America, and
14:46
Speaker 3: he ended up being a cook cook. But he loved
14:50
Speaker 3: the American West and he always talked about it. And
14:52
Speaker 3: he took one vacation in his life and it was
14:54
Speaker 3: to Arizona, and he saw a rodeo and he wore
14:56
Speaker 3: a bolo tie every day till the day he died,
14:59
Speaker 3: and talked about roode on Arizona. So when he passed away,
15:02
Speaker 3: all eight of his kids moved to Arizona.
15:05
Speaker 1: Really yeah, So how old were you when you moved
15:08
Speaker 1: to Arizona?
15:09
Speaker 3: I think six years old.
15:10
Speaker 1: And did you say we're going to watch the cowboys,
15:13
Speaker 1: We're going to be living at the cowboys or what
15:15
Speaker 1: you think about that?
15:16
Speaker 3: Yeah? I didn't. We didn't see any cowboys and we
15:17
Speaker 3: got there either. It's an I was pretty developed. It
15:19
Speaker 3: was a pretty small town back then, Arizona.
15:21
Speaker 2: What did your family, your parents do?
15:23
Speaker 3: My father passed away recently, but he is He was
15:26
Speaker 3: a union electrician and my mom was to stay home mom.
15:29
Speaker 3: She took care of myself and I had three older
15:32
Speaker 3: sisters and a younger brother who I just recently lost him.
15:35
Speaker 1: So when you were a boy, what were you interested?
15:38
Speaker 1: You want to be an athlete? Did you want to
15:39
Speaker 1: be an artist or what did you want to be?
15:41
Speaker 3: I wanted to be from the earliest I remember actually
15:44
Speaker 3: thinking about what I wanted to do. I wanted to
15:45
Speaker 3: be a journalist from probably ten years old or so,
15:50
Speaker 3: but loved movies and television. I we had my parents
15:54
Speaker 3: were young, We were you know, with the couse was
15:58
Speaker 3: pretty chaotic. I kind of like order, and I kind
16:01
Speaker 3: of liked the order that I saw on television, Like
16:03
Speaker 3: those families that sat down for dinner on TV. We
16:06
Speaker 3: did not do that my growing up. And the schedule
16:10
Speaker 3: of television, I found it to be very appealing. But
16:12
Speaker 3: I really fell in love with movies and television at
16:14
Speaker 3: a pretty young age, and through that saw a journalist
16:17
Speaker 3: as heroes and I just wanted to be a journalist.
16:20
Speaker 2: So you graduate from high school, then what did you do?
16:22
Speaker 3: I did. I was the editor of the school newspaper
16:25
Speaker 3: in high school, and I went to community college because
16:27
Speaker 3: I couldn't afford a university at the time, and was
16:32
Speaker 3: editing the college paper, the community college newspaper, Glendale Community College.
16:37
Speaker 3: There I met a lot of really incredible people. Probably
16:42
Speaker 3: one of the more influential ones was Ed Asner, who
16:45
Speaker 3: kind of made this connection for me between entertainment and
16:48
Speaker 3: politics and just opened my mind to a different world
16:54
Speaker 3: to do now. I also had an epiphanade about that
16:57
Speaker 3: time that I wasn't a very good writer, so likely
16:59
Speaker 3: I was not going to be a professional journalist.
17:01
Speaker 2: So okay, So eventually you got a job at a
17:05
Speaker 2: video store.
17:05
Speaker 3: That's what I was. That was my part time job
17:07
Speaker 3: when I was going to Glendall Community College, and then
17:10
Speaker 3: when I realized I wasn't going to pursue that degree,
17:13
Speaker 3: I kind of dropped out and it was meant to
17:15
Speaker 3: be a year, but it turned out to be a
17:17
Speaker 3: permanent move to business.
17:18
Speaker 1: So I understand that you became so knowledgeable about videos
17:21
Speaker 1: that when people come in and say what should I rent,
17:23
Speaker 1: you actually had actually seen a lot of these videos,
17:25
Speaker 1: and you could make recommendations. People came in because they
17:27
Speaker 1: liked your recommendations. I wanted to see what you're going
17:29
Speaker 1: to recommend.
17:30
Speaker 3: It's true. I again, for no reason, my mother, when
17:33
Speaker 3: we did not have the money for it, my mom
17:35
Speaker 3: bought a VCR. The early time, I didn't know anyone
17:37
Speaker 3: else who had a VCR, and serendipitously, the second video
17:42
Speaker 3: store in the state of Arizona opened up a few
17:44
Speaker 3: blocks from my house, so I started you know, devouring
17:48
Speaker 3: movies by rent renting them. And then I get a
17:50
Speaker 3: job at that store and the stores are empty all day,
17:54
Speaker 3: so you can watch movies all day. I watched everything
17:56
Speaker 3: in the store, and I had a pretty good memory
17:58
Speaker 3: for it back then, and I could remember what people
18:00
Speaker 3: liked when they brought something back, and I remember that
18:02
Speaker 3: that was like this, and this was like that. And
18:05
Speaker 3: sometimes the store would get so busy, but people would
18:07
Speaker 3: wait for me so they could ask me what to
18:09
Speaker 3: watch tonight.
18:09
Speaker 1: So did you go to the owner of the store
18:11
Speaker 1: and say I should be the manager of the store.
18:13
Speaker 1: I'm so popular here, or how did you think you
18:15
Speaker 1: were an advance your career by being knowledgeable about these videos?
18:18
Speaker 3: Well, it wasn't a plan. He came to me and said, hey,
18:22
Speaker 3: we love what you do here, and my wife's had
18:25
Speaker 3: a couple of kids since you've been here, and the
18:27
Speaker 3: business has been growing. It grew to several store chain
18:30
Speaker 3: and he goes, I never seen my wife and I
18:31
Speaker 3: need to take some time off, and would you take
18:33
Speaker 3: things over? And he gave me the keys to a
18:36
Speaker 3: video rental chain. And it was an MBA course in
18:39
Speaker 3: film school all wrapped into one for me.
18:40
Speaker 2: How did you go from there to Netflix?
18:43
Speaker 3: Well, in between, I went to home video distribution, so
18:46
Speaker 3: the companies that sold the vhs and DVDs to the
18:49
Speaker 3: video stores. And while I was there, I did a
18:53
Speaker 3: pretty unique deal with Warner Brothers and Sony to revenue
18:57
Speaker 3: share DVDs, which just hadn't been done before. And read
19:01
Speaker 3: Hastings It got written about it in a trade magazine
19:04
Speaker 3: and read read it and said this is what we need.
19:06
Speaker 3: And so a mutual friend introduced us.
19:08
Speaker 1: But if that article hadn't been in that trade press,
19:10
Speaker 1: you could still be at that DVD story.
19:12
Speaker 3: You think there is still one by the way, it's
19:14
Speaker 3: still open that first store, that one store is still
19:17
Speaker 3: open there.
19:18
Speaker 1: The company is extremely successful. The problems you may have
19:21
Speaker 1: had you seem to be behind you. So what is
19:23
Speaker 1: the future of Netflix? Do you think you can keep
19:25
Speaker 1: growing the subscriber base or how do you view your
19:29
Speaker 1: future success? What is your goal to be in the future.
19:32
Speaker 3: To do well, I think we've got plenty of room
19:34
Speaker 3: to grow both the subscriber base and revenue. For a
19:37
Speaker 3: lot with a long runway, two hundred and seventy seven
19:40
Speaker 3: million sounds like a lot of folks, But you know
19:42
Speaker 3: you could double that and still not be halfway to
19:44
Speaker 3: what the pay television universe was. And this is a
19:48
Speaker 3: much better product economically and choice and control and all
19:51
Speaker 3: the things that go into it. So I think there's
19:53
Speaker 3: plenty of room to continue to grow the spaces that
19:55
Speaker 3: were in you know, professional television and film and games.
19:59
Speaker 3: This is a six hundred billion dollar consumer spend market
20:02
Speaker 3: that we're about five percent of, and we go only
20:05
Speaker 3: get about ten percent of screen time today, so about
20:08
Speaker 3: ten percent of the time you're watching something on television,
20:10
Speaker 3: you're watching Netflix, So a lot of room to grow
20:12
Speaker 3: both of them.
20:13
Speaker 1: You are always being pitched on new projects that you're
20:15
Speaker 1: going to presumably do in the future. There are other areas.
20:17
Speaker 1: You're in sports now, you're in games. I guess you'd
20:21
Speaker 1: say you're you're into you know, the traditional content you have.
20:25
Speaker 2: Are you going to do news at some point?
20:28
Speaker 3: It's a pretty well served market. There's a lot of
20:30
Speaker 3: choices of how to get to news. So it hasn't
20:33
Speaker 3: been an expertise of ours yet, so we're not really
20:35
Speaker 3: looking at that.
20:36
Speaker 1: Hey, the most important thing I think people really want
20:38
Speaker 1: is interview shows. Yeah, you have enough interview shows on
20:41
Speaker 1: your yours.
20:41
Speaker 3: I have a feeling this would be a good pilot
20:43
Speaker 3: for ya.
20:44
Speaker 1: What is the last thing you've watched on Netflix? And
20:47
Speaker 1: if I say, all of a sudden, I want to
20:49
Speaker 1: watch one thing on Netflix, what do you think I
20:51
Speaker 1: should watch?
20:52
Speaker 3: For the first part of that is the thing I
20:55
Speaker 3: like to watch the most on Netflix is the thing
20:57
Speaker 3: that my wife and I can watch together. We do
21:00
Speaker 3: not have similar taste in movies and television that everyone's
21:02
Speaker 3: in all you find something that you really love to
21:04
Speaker 3: watch together. And for us, that was the new season
21:07
Speaker 3: of Emily in Paris that we just binged through in
21:09
Speaker 3: two sittings and she loved it and it was a great,
21:12
Speaker 3: great fun for me too. And for you. We have
21:15
Speaker 3: a new show coming in just starting this week called Monsters,
21:20
Speaker 3: the Eric and Lyleman Ninda story Ryan Murphy who created Dahmer,
21:25
Speaker 3: and it's a phenomenal drama.
21:27
Speaker 1: Let's talk about your future. Yeah, you're now in the
21:30
Speaker 1: company for how many years?
21:31
Speaker 3: I'll be twenty five, nicks to carp.
21:33
Speaker 2: So twenty five years and you were how sixty years old?
21:37
Speaker 1: Okay, well that's a teenager to me. So you're very young.
21:41
Speaker 1: So do you have any interest in ever, Let's say
21:43
Speaker 1: going to government, public service, running for office, being an ambassador,
21:46
Speaker 1: or anything.
21:47
Speaker 3: I would I would love to do something in public
21:49
Speaker 3: service that I can't see myself running for office, but
21:51
Speaker 3: I would love just to be of service to the country.
21:53
Speaker 2: So at some point you might do that.
21:55
Speaker 1: Y at some point, did your parents live to see
21:57
Speaker 1: your success and did they ever tell you how proud
21:59
Speaker 1: they were of you?
22:02
Speaker 3: My dad passed away two years ago, and he did
22:07
Speaker 3: see the success. And I don't think he totally understood
22:10
Speaker 3: what I did, but he knew that it was pretty cool,
22:14
Speaker 3: and he knew because people would tell him, that's pretty
22:16
Speaker 3: cool what your son does. And my mom unfortunately passed
22:20
Speaker 3: away before Netflix became what it is today. But at
22:24
Speaker 3: the beginning we first started, you know, House of Cards
22:27
Speaker 3: Days was a show up on all the award shows.
22:30
Speaker 3: My mom likes to like to watch a lot of television,
22:33
Speaker 3: and so she would always love to see me on
22:35
Speaker 3: television at an award show, and she would call me
22:37
Speaker 3: every once in a while and say, Hey, I'm watching
22:39
Speaker 3: this award show. Are you there? I go, No, that's
22:41
Speaker 3: the SP's mom. I'm not part of the SPS. So
22:43
Speaker 3: but she got she really got a kick out of
22:45
Speaker 3: it all, so yeah, but they didn't get to see
22:46
Speaker 3: all of it, but they got a sense of it.
22:48
Speaker 1: And did they have a Netflix subscription to do? Buy
22:50
Speaker 1: them one or they already had one?
22:52
Speaker 3: They I bought them one.
22:53
Speaker 1: And what would you like to see as your legacy
22:55
Speaker 1: to the world of entertainment? What do you think legacy
23:00
Speaker 1: should be or will be?
23:02
Speaker 3: You know, I hope it has been that or is
23:06
Speaker 3: or will be or how every want to praise it
23:09
Speaker 3: will be the guy who put the audience first. Tony
23:13
Speaker 3: Bennett was a great friend of mine and he was
23:15
Speaker 3: my hero, and he said it bestie said, the audience
23:18
Speaker 3: is the most important member of the band. And I
23:20
Speaker 3: feel like what I want approach that we put into
23:23
Speaker 3: Netflix and into the programming, into our films and TV
23:26
Speaker 3: and our games, is that we put the audience first
23:28
Speaker 3: and think about how are they going to love it?
23:31
Speaker 2: First?
23:31
Speaker 3: We'll build a business model around it for but think
23:33
Speaker 3: about how will you please in the audience first?
23:37
Speaker 2: Thanks for listening to hear more of my interviews. You
23:39
Speaker 2: can subscribe and download my podcast on Spotify, Apple, or
23:43
Speaker 2: wherever you listen.