The lastest issue of Fortune has a profile of Netflix (NFLX) founder Reed Hastings, whose company just blew everyone away with spectacular fourth quarter earnings.
In the article, Reed names four secrets to his company’s success.
- Target a specific niche: When there’s an ache, you want to be like aspirin, not vitamins. Aspirin solves a very particular problem someone has, whereas vitamins are a general “nice to have” market. [The Netflix idea] was certainly aspirin.
- Stay flexible: We named the company Netflix (NFLX), not DVDs by Mail because we knew that eventually we would deliver movies directly over the Internet. DVDs will be around a long time, but we’re building for the day when they’re not.
- Never underestimate the competition: We erroneously concluded that Blockbuster (BBI, Fortune 500) probably wasn’t going to launch a competitive effort when they hadn’t by 2003. Then, in 2004, they did. We thought, Well, they won’t put much money behind it. Over the past four years they’ve invested more than $500 million against us.
- There are no shortcuts: Occasionally great wealth is created in a short amount of time, but it’s through a lot of luck in those situations. You just have to think of building an organisation as a lot of work. It may or may not turn into great wealth.