Netflix: The Idea And The Inspiration

Netflix idea

How did Netflix come about, and what was the exact inspiration behind the entire concept? Today, it has boomed into a company that has amazing incentives for employees and is known for it’s simplicity and efficiency. It has also created a ton of fortune for creator Reed Hastings, who now reached the billionaire status and serves at the CEO.

It all began when Reed Hastings joined the Peace Corps and had travelled to Swaziland, Africa to teach high school Math. The adventure alone gave him an entrepreneurial spirit. Following the trip, he returned with some much needed direction, he would go to Stanford University and achieve his master’s degree in computer science. He started a successful computer software troubleshoot program which was eventually bought out.


“Once you have hitch-hiked across Africa with ten bucks in your pocket, starting a business doesn’t seem too intimidating.” – Reed Hastings



The Big Idea:

Reed Hastings was now on the search for a new start-up and wanted to assure he learned the lessons from his first business. He was apparently late on his movie rental of Apollo 13 and had a big late fee for it.


“It was six weeks late and I owed the video store $40. I had misplaced the cassette. It was all my fault. I didn’t want to tell my wife about it. And I said to myself, ‘I’m going to compromise the integrity of my marriage over a late fee?” – Reed Hastings



That same day of having this personal discussion with himself, Reed went to the gym and realized that they had a much more efficient and profitable business model – a monthly fee. No matter how much you workout, every day or not even once throughout the month, you pay the exact same. This gave him the initial spark for the idea of Netflix. Initially, he had no idea if consumers would even purchase such an unorthodox method for movie rentals. However, in the beginning stages of the business, it was not as clear cut as it is now. The no late fee’s and unlimited usage concept was something that was integrated slowly, because they really didn’t know if it would make sense to the public.

Due to it working out, Reed Hastings pursued much riskier tactics in all aspects of the business, things that felt right, intuitive ideas and instincts were followed from then on. The complete internal dynamics changed as Reed took control of creating an empowering culture called “Responsibility and Freedom”, it was extremely innovative. For example, Netflix is now known for paying much higher than average salaries – resulting in some of the best recruitments. Employees are also given the option of a cash or stock option. They also completely removed sick and vacation time, rather allowing the workers to manage this time freely.


Moral Of The Story: Follow those gut ideas and intuitive thoughts, and take action when inspiration strikes you in the heart!



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