Few know that in the summer of 1998, Netflix its future was at stake in a meeting that brought founders Reed Hastings and Marc Randolph face to face with Jeff Bezos, CEO of Amazon, the e-commerce giant.
A “no” to a millionaire business proposed by Bezos was, maybe, what saved Netflix from disappearing from the map and what eventually led to it becoming the entertainment and subscription service company
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Presentations and releases of that Netflix vs. Amazon, which took place more than 20 years ago, is described in detail in the book. “This will never work: the birth of Netflix and the amazing life of an idea “, written and published by Marc Randolph in 2019. The story was also told in media outlets such as CNBC Make It.
An unexpected call
Netflix has been in business for about a year and a few months as a DVD rental company that competed with Blockbuster.
Hastings and Randolph ran a website and a series of deals with DVD makers to keep the business afloat when, in the summer of 1998, they received a call.
“Jeff (Bezos) wanted to meet us,” Randolph told CNBC in an interview.
Although Amazon at the time was far from the most valuable brand in the world and that Jeff Bezos will become the richest man in the worldIt was not a company of any kind. Randolph says in his book that, with four years of operations, Amazon already had $ 100 million in annual sales of books and about 600 employees.
(Further: Do you know how many millions of dollars Netflix just earned?)
These figures motivated Randolph and Hastings to fly to Seattle to meet with Bezos. However, they anticipated what the national e-commerce player was doing.
“They wanted it to be a ‘whole store.’ That would never work, “Randolph wrote in his book. At the time, Amazon was looking to acquire different types of companies to expand, and the video market was certainly an attractive option.
When Netflix co-founders arrived at Amazon’s offices, they were surprised. “I went into an office that was a pig farm. People were crowded there. The offices were old wooden doors and Jeff (Bezos) was in an office with four other people, ”says Randolph.
There they were offered to buy Netflix for an “eight-figure sum.” “That could be between $ 14 million and $ 16 million.”Randolph wrote in his book.
It was an attractive proposal for a company that had only been working for a few months and for the two entrepreneurs. At the time, Randolph owned 30% of the company and Hastings 70%.
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The book reveals what they both thought about the offer. Hastings is said to have believed at the time that Netflix had much greater potential than Bezos’ offer.
Randolph, on the other hand, felt good about having that money. After all, the profitability of the rental model was not high and the business costs were high.
On the return flight, both partners weighed the pros and cons and finally decided it was not the time to step aside. Upon landing, they called Amazon and rejected Bezos’ proposal.
Although there were no acquisitions, the Business Insider portal ensures that Randolph’s memoirs have a short association between Netflix and Amazon. Netflix included links for customers to purchase DVDs from Amazon, and in turn, Amazon referred to a link to rent movies on Netflix. But while, says Randolph in his book, the business was successful for Amazon, it was not so successful for Netflix. The alliance was concluded and each of the companies went its own way.
This “no” to Jeff Bezos’ proposal and the distance both companies took was a determining part of Netflix’s history.. Today, those $ 14 million or $ 16 million purchase offers from Amazon are nothing compared to the position that the leader in audiovisual content has today by subscription.
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According to the latest reports, Netflix closed 2020 with a profit of $ 2.761 billion. And according to Forbes indicators, Netflix’s revenues are in the order of $ 21.4 billion and they currently have 8,600 employees.
In the recognized Forbes lists, Netflix is on the 26th place in the ranking of the most valuable brands in the world in 2020.
Also, just over a week ago, it was confirmed that Netflix had exceeded 200 million subscribers by the end of 2020.
TIME