Learning from Marc Randolph

Overview

Mark Randolph is an author, mentor, investor, and serial tech entrepreneur who is best known for founding Netflix with Reed Hastings in 1997.

His first real job was at the Cherry Lane Music company in New York in 1981. There, he found different ways to sell sheet music to customers and learned various direct mail and marketing strategies.

Randolph met Netflix co-founder Reed Hastings at Pure Software where the pair discussed the idea for the company while carpooling to work.

Marc's Insights

Marc is very active on Twitter, most of these he has shared as Tweets and I've summarized some of my favorites here.

On Life

"I hope you never stop recognizing how precious it is to sit with your children around a dinner table every night."

"One of the most important things I tried to show my own kids was that 'dad loved what he did'. My work wasn’t a chore or an obligation, but something that fulfilled me, and that’s it’s possible to love your job."

"There are always going to be more opportunities than time. Saying "no" is the only way I know of to get the important things done. It's not easy - just essential."

"Gain the ability to make decisions based on incomplete, inconclusive, and often contradictory information."

"One of my biggest regrets? Making a political donation and giving them my cell phone number."

"Never assume that people who “just don’t get it” are idiots or non-innovators. Instead, start out by assuming they see something you don’t. Let them try to prove you wrong. Then you can decide if it’s something you can afford to ignore."

On Hiring

"The first rule of hiring: Don’t hire until you absolutely must.

First, if you’re not absolutely sure you need someone…don’t hire them. Your needs should drive your hiring, not the other way around. And hiring someone before they can be fully utilized can drive decisions that are inefficient (or just plain dumb).

Second, wait until it’s painfully obvious that you’ve got a huge capability hole that’s hurting your ability to execute. Almost every company hires too fast, thinking: “I have the resources, I should use them.” But 99% of companies that go out of business do it by running out of money. Only 1% do so because they didn’t hire enough people.

Third, if you need something done, do it yourself first. It’ll give you a better idea of whether you really need someone, and a clearer idea of what kind of person you want in that position once you do.

Finally, when you do hire, aim to balance your own strengths and weaknesses. Especially early on, having one person which compliments you is better than three that think the same way you do."

On Entrepreneurship

"It's funny, but looking back, the times I remember most fondly were not the times when everything was going smoothly, but the times when it was most difficult. Being under pressure - and dealing with it successfully - is when you feel most alive as an entrepreneur."

"The role of a founder-CEO is extremely lonely. There are certain things you struggle with that are just not appropriate to share with your board, your investors or your employees. And while you can always go to your peers with an issue, most of the time they lack the context to really do more than be supportive or offer pattern recognition solutions. That’s why it’s so important to find someone who a) has a life that will not be upset by the outcome, b) is willing to invest the time to really understand what you’re going through, and c) has the skills, background, and/or experience to provide great counsel. It’s pretty rare...but worth searching for."

"If there’s one piece of advice I find myself giving budding entrepreneurs more than any other, it’s to stop worrying about perfection. The knowledge they will gain by throwing up a rough cut of their idea, and doing it quickly, cheaply, and easily, will pay dividends over and over and over again."

"I tell every entrepreneur I meet, don’t chain yourself to your desk, your phone, your office. Give yourself some distance. Get a life. It’ll help your work."

"People have a misguided notion that famous entrepreneurs get everything right, but it's exactly the opposite. Instead, they have become quite comfortable getting a lot of things wrong."

"Here’s my best fundraising advice: It has to be working before you start asking."

On Building Companies

"It's unreasonable to expect my CEOs to always give me good news. But what I do expect is for you to understand why that bad thing happened, and to have a plan to do something about it. In other words, show me you’ve got both hands on the wheel."

"Your most talented workers don't want kombucha on tap, fireman poles, nap pods, or any of the other bullshit a lot of employers consider to be perks. What they want is freedom coupled with responsibility. They want to be empowered to make decisions, not simply be told what to do."

"As a founder, it’s your job to set an example for your team—and that includes taking breaks. The benefits of getting some downtime are well-established, not just for individual wellbeing, but for performance and team effectiveness. Startups are notoriously all-consuming environments (I know mine certainly were), but at a certain point even the best teams are going to get burned out. That’s why it’s not enough to just tell people that taking time off is important. You have to do it yourself. Those companies with “take all the vacation you want” policies aren’t fooling anyone: not many team members are going to spend a week outdoors if the boss never leaves the office."

"You can’t be best-in-class at everything, but you probably need to be the best at something. Knowing your organization’s core competency can make some of your future decisions a lot easier."

"One of the worst “standard practices” for startups is requiring departing employees to exercise their options within 90 days of leaving - or lose them altogether. I know, I know - you want a tighter cap table. But it’s just cruel. It could be years before those options have value. They did their work to earn their options - why force them to put in money as well? Instead, let them keep vested options until the options expire - which is usually 10 years. It’s only fair."

"In an early-stage company, there are almost only two things that matter. One is money, and number two is getting customers."

"Always make it easier for customers to be honest, rather than make it harder for some of them to be dishonest."

"No, our company is not like a family. Stop telling me your company is like a family. It’s not. When was the last time you fired someone from your family? “Son, your mother and I have been talking, and we’ve decided to outsource ‘taking out the trash’. I’m afraid we’re going to have to let you go.” At Netflix, for example, we never thought of ourselves as a family. We always considered ourselves more like a sports team. And not a Little League team, where everyone gets to play and at the end of the season everyone gets a trophy. No, we were a professional team playing at the highest level, and my responsibility as manager wasn’t to make sure everyone got playing time. It was to make sure I put the best possible team on the field for every game. I did that because I owed that to the team owners. I owed it to the fans. And most importantly, I owed it to the other players. I learned a long time ago that what the best players want is not just a friendly attitude in the locker room. They want to know that everyone excels at their position. They want to know that everyone will be trying as hard as they can. They want to win. That’s why a manager’s job is not just to hire well and motivate your team to be the best they can be. It’s also to make sure that when someone isn’t holding their end, you’re the person who sits them down and explains why you’re sending them down to the minors. This is especially hard in a startup, because in almost every case, the players you start with aren’t going to be the ones you finish with. At the beginning, you’re looking for generalists. Since you don’t yet know what they will need to be great at, you want people who are good at a lot of things. You want people who are comfortable with the fact that their job description is going to change weekly. You want people who are motivated by the adventure, rather than by stability. That first team is going to give you everything they have. They’ll leave better paying jobs with great benefits to work for a fraction of their salary. They’ll work nights and weekends. They’ll do everything you ask—and then some. So it’s especially brutal when your company is just starting to take off, and you have to sit someone down and tell them that they won’t be coming with you on the next stage of the journey. Or that you’re bringing in a more experienced executive over them. That part is neither easy nor fun. But it’s the job. And if I can’t do that, I don’t deserve to be in my position either."

Key Lessons from Marc's Reflection

Romeen Sheth gave his key lessons and they're brilliant:

1. Everyone should have a north star - success is what you make of it; money, influence, impact, balance, intellectual satisfaction. There’s no right or wrong; it’s different for each person. The worst thing you can do is build a life around somebody else’s definition of success
2. Values are easy to have, hard to uphold - Your values shine through in difficult times - Extending Marc’s example, it’s not difficult to wrap up at 5 pm on a quiet Tuesday. In a crisis situation, it is difficult, but not impossible. If it’s truly a value, it will be upheld in rain or shine.
3. Compounding is magical - It is so difficult to measure the compounding quality of non-quantitative actions. In business, we see the impact our decisions have daily; these are easily measurable and can be measured over hyper short duration timeframes. It’s why we gravitate towards them - instant gratification. What we don’t see however is the impact of daily decisions that aren’t easily measurable, e.g. an individual conversation with a colleague, a sit down dinner with a family member, daily inward reflection. These decisions don’t breed instant gratification, but they are so important - they’re the source of enduring and sustainable long term gratification.
4. Balance comes from imbalance - I’ve found that the best way to achieve enduring happiness is to go “all in”on whatever you’re doing. If you’re at work - go all in; focus, be the best teammate and leader you can be. If you’re at home - do the same; be the best spouse, partner, parent, sibling, you can be.
5. Constraints force impact - This has been a learning for me as I’ve scaled myself as a Leader. The biggest challenge when you’re operating a high growth business is focus; my friend has a simple framework he uses that I love (and stole!). Every company earns the *right* to do a handful of things really well. No more, no less. Inserting constraints forces you to focus, prioritize and spend time on areas that are highest impact and highest leverage.