Blockbuster Ceo Quotes

The best entrepreneurs don’t just follow Moore’s Law; they anticipate it. Consider Reed Hastings, the cofounder and CEO of Netflix. When he started Netflix, his long-term vision was to provide television on demand, delivered via the Internet. But back in 1997, the technology simply wasn’t ready for his vision—remember, this was during the era of dial-up Internet access. One hour of high-definition video requires transmitting 40 GB of compressed data (over 400 GB without compression). A standard 28.8K modem from that era would have taken over four months to transmit a single episode of Stranger Things. However, there was a technological innovation that would allow Netflix to get partway to Hastings’s ultimate vision—the DVD. Hastings realized that movie DVDs, then selling for around $ 20, were both compact and durable. This made them perfect for running a movie-rental-by-mail business. Hastings has said that he got the idea from a computer science class in which one of the assignments was to calculate the bandwidth of a station wagon full of backup tapes driving across the country! This was truly a case of technological innovation enabling business model innovation. Blockbuster Video had built a successful business around buying VHS tapes for around $ 100 and renting them out from physical stores, but the bulky, expensive, fragile tapes would never have supported a rental-by-mail business.

The fate of the two companies was starkly different, as was its leadership. In its 25-year history, Blockbuster had five CEOs, none of whom had much interest in the inner workings of the video rental business. Netflix is still run by its Co-founder, Reed Hastings, who wrote a $1.9 million check 23 years ago to start the company. He is a self-described “math wonk,” and it shows in the company’s obsession with following the numbers to what its customers want. Blockbuster had thousands of times more data about movie watching than Netflix but rarely used it in productive ways. Even though Netflix was a fraction of the size, its obsession with data created a knowledge advantage that became its ultimate weapon against Blockbuster.