3 Leadership Lessons From the Co-Founder and First CEO of Netflix

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As seen in Inc.

Creating a success story didn’t come without trials and tribulations for this founder.

Netflix is one of the greatest case studies on how to build a market-changing business. Want to disrupt Goliath? Check. Learn how to build a unified culture? Check. Need to grow a brand internationally? Check. Be customer-obsessed? Check.

When Marc Randolph and Reed Hastings founded Netflix in 1997, Hastings was initially less involved and Randolph was the CEO. This relationship was harmonious until one day, six months after the company’s launch, Hasting’s walked into Randolph’s office with a PowerPoint. Around the same time, Netflix was just about to go with its all-rental model and jettison selling DVDs.

That wasn’t all that was about to change.

In his book that came out in September, That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea, Randolph shares the exciting and educational story of the founding of Netflix and, about the fateful meeting where Hasting’s asked him to step down as CEO. Incredibly, Randolph agreed to step down from his position and serve as President.

As someone who has had his own leadership trial moments, I was amazed by this story. I also realized there are leadership lessons to draw from Randolph’s experience.

Be able to listen to and evaluate performance feedback.

When Hastings walked into Randolph’s office in the fall of 1999, Randolph had no idea he was about to be asked to step down. Hastings had prepared a PowerPoint outlining Randolph’s strengths and areas for growth. The gist was this: Hastings thought Netflix needed a CEO who could take Netflix to the next level. That CEO was not Marc Randolph.

To his credit, Randolph listened to the feedback and asked questions to learn more. This resonated with me in a big way. During my time as a leader, one of the most important things I’ve learned is how to listen to feedback about my work and leadership. 360 reviews, executive coaching, and continuous accountability are key for leaders. I know that getting 360 reviews from your peers, boss, and reports can be painful at times. Done properly and received with an open mind, however, this type of feedback will make anyone a better leader (even me).

Put your ego in check for the greater good.

As Randolph recounts in this memoir, his demeanor may have been calm, while the thoughts and words going through his head weren’t. It was his dream to be CEO of his own company. He had put all his time, energy, and a ton of research into taking the idea of DVD rental from concept to profit. Netflix was his baby.

As Randolph took time to reflect on Hastings’s request, he saw his dream as two ideas: founding a company and being a CEO. He then looked around at all the people who believed in him, who had followed him, who left well-paying jobs for him, and decided the company wasn’t just his dream anymore. Netflix was larger than his individual dream. He checked his ego and did what was best for the company to continue.

In a similar vein, I’m a leader and not the CEO of my company. I have led teams at various companies, and have been a co-founder, serving as the CIO, COO and as a President. The skill sets are different, the roles are different, and candidly, I love being able to get close to challenges, people, innovations and how to jump-start and foster hyper-growth. Plus, full transparency, I’m not always known for extreme patience and diplomacy.

Know your limitations and strengths.

Randolph engaged in self-evaluation after his talk with Hastings. He saw he was really strong at being a team builder and creating a company culture. He was really good at taking an idea and launching a new company. On the other hand, he was not as interested in taking Netflix to the next level or running a day-to-day business.

Today, Randolph follows his passions by helping other companies. He continues to invest in startups and mentor leaders for very successful outcomes, including the recent acquisition of Looker by Google. He was an early angel investor at Looker and also on the board.

Like Randolph, I am learning my strengths and areas for growth, seeking to learn and develop more every day. His story is inspirational, especially how he probably made the wisest leadership decision of his life, knowing when to take the lead–and when to step back and allow others to take the company to the next level.