ATLANTA — Marc Randolph, Netflix’s co-founder and first CEO, said his flaw is that he likes every idea he hears. 

Optimism is not an ideal characteristic for an angel investor, Randolph told an audience at the International Fresh Produce Association’s 2024 Global Produce & Floral Show during his Oct. 17 general session, titled “That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea.” 

Across all the companies Randolph has invested in, he said he would never have correctly predicted which ones would become the most successful. 

“You never know which idea is the one that’s going to make it happen,” Randolph said. 

This was the case with Netflix, which began as Randolph’s idea to create a way for people to rent movies via mail. When he first shared the idea with his Netflix co-founder, Reed Hastings, during one of their carpool commutes to work, DVDs did not yet exist, so the logistics of sending a bulky VHS tape in the mail made Hastings say, “That will never work.” 

However, the day that Hastings found out about DVDs, he brought the idea back up to Randolph, they went to a store and bought a CD (DVDs were not yet available in retail stores), put it in a greeting card envelope, and mailed it to themselves to see if it would arrive unbroken. 

The next day, they received their CD in perfect condition, and they realized that with DVDs, they could mail movies to consumers for the cost of a postage stamp. 

There was a lot of trial and error as they found that customers were less likely to use the service if there were due dates and late fees and that a subscription-based model worked better. They also had to scramble to fix a website crash within the first 10 minutes of officially launching on April 14, 1998. 

Randolph said that when you have a good idea, it can survive mistakes and setbacks. People will still be interested as you work through the issues. 

So how do you come up with a good idea? 

“Look for pain,” Randolph said. 

The best ideas solve problems that already exist, Randolph explained. The first half of forming a good idea is to look for what’s wrong. The second half is picking something that you know well. To solve a problem, you must understand the problem, he said. 

One example Randolph gave of a problem that still needs to be solved today is paint cans. He walked the audience through the unnecessarily difficult experience of using a paint can, and the laughs and groans around the room proved that it was a relatable problem. 

“Paint cans have not changed in 40 years,” Randolph said. “We have self-driving cars with the internet in them, but paint cans have not changed.” 

Randolph identified the following problems with paint cans: 

• Opening the can requires a screwdriver. 
• The paint must be stirred with a stick before it can be used. 
• There is no spout to pour the paint into the tray. 
• As the user lifts the can back up after pouring, paint runs down the side of the can and, even worse, pools up in the lip around the can. 
• To close the lid, the user has to hit it with a hammer. 
• If the user forgets there is paint in the lip around the can, paint splatters everywhere as they hammer the lid closed. 

“Why isn’t there…” “Why can’t there… “Why don’t I…” 

These are the questions Randolph suggested the audience had been asking themselves as he was talking about the paint cans. That is how you come up with a good idea, Randolph said. What simple problems have gone unaddressed for decades, and how can you solve them? 

To keep your good idea good, be open to change 

Once you have your good idea, other people can come along with better ideas, Randolph said. The key to success is being willing to change and take risks. 

For example, Randolph and Hastings pitched Netflix to Blockbuster when the company had just begun, aiming to sell rather than go up against their biggest competitor. Blockbuster turned down the offer because its business model was working, and the profit Netflix generated was a small fraction of what the Blockbuster stores were raking in, Randolph said. 

Blockbuster chose to stick to what it was doing well and avoid the risk associated with purchasing a newer business that could distract from its regular operations. Now it has only one store remaining, and Netflix has grown so big that the name has become a verb, Randolph said. 

“If you are the category leading company, you don’t know who is coming after you,” Randolph said. “They are going to be doing things you might be scared to do or haven’t thought to do. If you aren’t prepared for change and open to adapt, early-stage companies will try what you don’t and disrupt your business.” 

Randolph also added to be smart with the risks you choose to take. He advised against spending your own money until you know you have an audience that is excited about your idea. With the internet, it is easier than ever to test out ideas without spending money, he said. 

Lastly, Randolph said confidence in yourself is key. Be prepared to hear, “That will never work,” over and over again, until you find the idea that sticks, he said. 

“Success is proportionate to how many ideas you try,” Randolph said. “With persistence, you can find the one that makes all of the rest of your ideas worth it.”