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Bringing Flicks to the Future: Netflix is Launched

Article Overview: In 1991, Hastings quit his job with Adaptive Technology and set up his own company called Pure Software. It was dedicated to developing troubleshooting products for software. But, as the company grew, Hastings found that his mathematics and computer background was not match enough for running a business. Indeed, he asked his company’s own board of directors to replace him for the good of the company.

Bringing Flicks to the Future: Netflix is Launched

In 1991, Hastings quit his job with Adaptive Technology and set up his own company called Pure Software. It was dedicated to developing troubleshooting products for software. But, as the company grew, Hastings found that his mathematics and computer background was not match enough for running a business. Indeed, he asked his company's own board of directors to replace him for the good of the company. "As the company grew from 10 to 40 to 120 to 320 to 640 employees, I found I was definitely underwater and over my head," he says. "I tried to fire myself - twice. I was losing confidence."

Still, the board refused to get rid of Hastings, forcing the former math teacher to master the business world - and fast. "I was an engineer myself," he says. "We doubled our revenue every year, but my transformation from engineer to CEO was when Morgan Stanley took the company public in 1995."

The following year, Hastings decided to merge his company with Atria Software, a company that created tools to manage the development of complex software. Pure Software was able to integrate its programs for detecting bugs in software with Atria's programs. Together, the new company became Pure Atria. "With a single vendor and a unified sales force, we'll be able to make a really profound difference in the way people develop software," Hastings said at the time.

However, the merger was fraught with difficulties from the onset, the most significant of which was the departure of the head salesmen of both companies in the days after. Following their exit, the two companies had problems joining their sales forces. Hastings was named Chief Technical Officer of the new company, but could do little to salvage it.

In the end, Hastings and his new partners agreed to sell the company to Rational Software. The news led to a drop of 42 percent in its stocks, and Hastings' departure soon thereafter. "I had the great fortune of doing a mediocre job at my first company," he says. "We got more bureaucratic as we grew."

It took Hastings two years before he decided he was ready to try again. This time, however, things would go differently.

In 1998, Hastings founded Netflix in Los Gatos, California as a movie rental by mail service that offered a flat rate. At the time, Hastings admitted that while he thought his business was a good idea, he did not know whether or not customers would use his service.

But all of that changed five years later. "I was down in Arizona in 2003 visiting one of our distribution centers on the outskirts of Phoenix," Hastings recalls. "It was raining, and my umbrella wasn't working, so I walked the half mile from the distribution center to the hotel. I got the message on my BlackBerry that we hit a million [subscribers] that day while I was walking in the rain. It was this beautiful moment where I was just so elated that we were going to make it, and that was also the first quarter that we turned profitable. It was a magic walk."

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Article Tags: adaptive technology, business world, chief technical officer, complex software, computer background, flicks, great fortune, hastings, math teacher, mediocre job, merger, morgan stanley, netflix, new partners, profound difference, rational software, running a business, salesmen, salvage, troubleshooting products



Related Forum Posts
Re: Do you think Blockbuster will survive? - I don't know if they will survive or not but I do know that I don't ever go there anymore. I also don't use Netflix. I only use the Redbox movie rental stations these days.
Future Financial Corporation - I've never heard of Future Financial Corporation is this a new company?
Re: Do you think Blockbuster will survive? - Personally, I don't feel that renting movies online has the same "movie rental experience" as going to a bricks-and-mortar store like Blockbuster. It'll be a shame if/when Blockbuster goes out of business because of Netflix and the rise in DVD piracy.
Recruiting - Bringing in the right people into the company is definitely the first step. I've only given on and hired a few people I wasn't confident about and each time I beat my head against the wall to train them. Its just not worth it to bring in the wrong people. Much better to hold out and hire people that are "rigth" for the job. Shri
Re: Would you pay $35 for a movie ticket? - No way. We went to a similar theater here in the Chicago suburbs and one in Florida while vacationing. We found that people still talk during the movie and the noise of eating food, etc is just as annoying at $35 as it is at $9.00. We put in a video room complete with reclining chairs, high quality sound, HD DVD player and very large HD TV and that works great. Netflix is our friend, nobody talking and we can pause the movie for bathroom and snack breaks.


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