DVD replacing VHS is just the beginning
“Often, the best way to find out if your crazy idea works is to simply try it. So that’s what we did,” mark randolphco-founder and former CEO of Netflix,
That crazy idea was to send a CD in the mail to see if the concept of a mail order DVD subscription service would work. The CD was shipped by USPS in a greeting card envelope and delivered safely the next day. Confirmed Netflix proof of concept for operation.
This week, 16 years after reinventing itself as a streaming company, Netflix announced it was closing its mail-order DVD business. But how did it go from sending out a single CD to becoming the juggernaut it is today? let’s see.
“All I knew was I wanted to start my own business and sell stuff on the Internet. That’s it,” randolph wrote on Twitter.
Reed Hastings met Marc Randolph when they ended up working together at Pure Software after an acquisition. This results in them sharing an office and a car for their daily commute. Ready for a new challenge, Hastings and Randolph exchanged ideas for a new company.
DVDs had barely been invented. In fact, when the founders of Netflix wanted one to try mailing, they couldn’t find one anywhere to buy it.
The ideas are as varied as personalized shampoo (!), personalized dog food (!!) and selling vitamins online. All of these products exist now, but at the time the duo dismissed them as unviable.
Another not-so-viable idea would be to challenge Blockbuster by shipping VHS tapes, which are too big and bulky to ship by regular mail, and FedEx would eat into profit margins. Then something happened: the Digital Versatile Disc, or DVD, came along. They were smaller and thinner than their VHS counterparts, a technological innovation that opened up a new form of video rental. By the way, once the internet got fast enough and ubiquitous, streaming would also be possible, giving rise to Netflix as we know it today, but I was a little ahead of my time.