There’s no fail-safe recipe for startup success, but there are some things founders tend to have in common, according to Netflix founding chief executive Marc Randolph.
Speaking at ‘The Uncut Story of Netflix’, an event hosted by StartCon at Melbourne Town Hall on Monday, Randolph explained the $220 billion streaming giant he co-founded with Reed Hastings in 1997 is “just one of the seven startups I’ve had a hand in starting”. And while there are no hard and fast rules, Randolph said there are some lessons he has picked up along the way.
Startups don’t need to be in Silicon Valley, he said, as “there’s remarkable innovation taking place all over the world”, including in Australia.
Founders don’t need any special skills, computer science degrees or masters degrees in business, and they don’t even need to be particularly smart, Randolph said.
However, among the most successful startups, there are three major common denominators.
1. Tolerance for risk
Firstly, and most importantly, founders must have a tolerance for risk, Randolph said.
“I don’t mean scary dangerous risks … I mean the type of risk taking that happens when you start down a trail but aren’t sure what’s around the bend,” he added.
The trick is simply to get started, as “if you want until you have enough information, you’re too late”.
“If you’re not prepared to take that first step … you are never going to even start,” Randolph said.
However, at the same time, it’s not about wandering “aimlessly”.
“You need to have some guiding star,” he said.
2. Ideas in their hundreds
To launch a successful startup, clearly you need an idea. But, more than this, you need “hundreds, if not thousands”, of ideas, Randolph said.
They don’t need to be big ideas, he added, suggesting that Facebook’s Mark Zuckerberg “just wanted to meet girls”.
Equally, it doesn’t have to be a new idea — Amazon started out just selling books — or a complicated one. A post-it note, for example, is just a piece of paper.
“It doesn’t even have to be a good idea,” Randolph said. In fact, good ideas can be surprisingly difficult to tell apart from bad ones.
“Why is it that no one can really tell a good idea from a bad idea? Why is that so hard?” he asked.
Randolph quoted William Goldman, Hollywood writer and author of The Princess Bride, who famously wrote “nobody knows anything”.
He was talking about Hollywood, but the concept is applicable to any situation “where people are trying new things,” Randolph said.
“You have to take that risk and do something,” he added.
Randolph advised founders not to waste too much time on planning, saying the only way to really put an idea to the test is to send it out into the real world and “see what happens”.
“No business plan ever survives a collision with a real customer,” he said.
When it comes to actually coming up with a new idea, founders could follow new technologies such as the Internet of Things or mobile, or trends like healthcare, but there’s one easy way to come up with ideas, Randolph said, and that’s to “train yourself to look for pain”.
3. Over-flowing optimism
Finally, Randolph said while he’s proud of what he accomplished with Netflix, “I’m never sure what to be proud of”.
It wasn’t that he was particularly smart, as “most of my ideas were bad ones”, he said.
He was persistent, which is important, he said, but the thing he is most proud of is his optimism.
“I’m not a glass-half-full optimist I’m a glass-overflowing optimist,” he said.
Now he’s no longer working at Netflix, Randolph is an angel investors for new early-stage startups, although he thinks he’s “terrible” at it.
“My flaw is that I like every idea that I hear, which is not a good formula for being a good angel investor,” he said.
However, one thing he is looking for in founders is confidence.
“You need to believe that even though this idea wasn’t the right one, [you] eventually [are] going to solve this problem,” Randolph said.
“The people who persist, the people who are creative, the people who don’t give up are the ones who eventually reach success, and that is in everybody’s hands,” he added.