Netflix co-founder Marc Randolph dropped a bomb on the attendees of a health care analytics conference Wednesday, warning that if their companies fail to embrace technology, and leverage it for better outcomes, they should expect to be left in the dust by innovators who are undaunted by risk.
"You never know where the next threat is going to come from," Randolph said. "They may not look like you. They may not even be in business today. You need to figure out how to disrupt yourself."
Randolph is a serial risk-taker himself, having founded six other companies in addition to Netflix, and acknowledged while a couple have achieved success measured in billions, he has also experienced mediocre results and even dismal failures. The key, he noted, is to just jump in.
"Take that risk," Randolph said. "Do something, try something, sell something, test something."
Randolph spoke following his presentation and noted that while his exit from the company in 2004 sprang from his desire to continue working in the realm of startups, he was very pleased with how the company has continued to evolve.
Netflix is now engaged with some 130 million users and has made a successful move into the realm of content creation. He noted that a company tenet embraced early on by himself and co-founder Reed Hastings to focus on content, versus the delivery mechanism, continues to validate its prescience.
"We decided early on that we would commit fully to becoming the best place to find the content you love while remaining delivery agnostic," Randolph said. "It worked when you received your content via DVDs, it worked when the world changed to digital delivery, and it will work at the next iteration … possibly beaming directly to your fillings."
Randolph said that while Netflix's segue from the delivery of physical discs to digital streaming was well anticipated, the company's jump into the production and distribution of original programming was less easy to predict. HBO, he said, illuminated the path forward with its early forays into exclusive content creation.
"HBO was the trailblazer on original content," Randolph said. "They recognized early on that if every cable service was carrying the same movies, why would anyone pay a premium?
"The solution they crafted was, of course, to create content available only on HBO."
Randolph said Netflix was well positioned, from a data perspective, to jump into content production. That, of course, is thanks to the wealth of information the company has accumulated on its customers' tastes in viewing. Those billions of data points was, and is, an invaluable vetting mechanism for hatching their homegrown programming, which has found success across numerous genres.
Netflix hits include "House of Cards" (political drama), "Orange Is the New Black" (comedy/drama based on Piper Kerman's prison memoir), "Master of None" (Aziz Ansari-driven comedy), "Daredevil" (live action Marvel series), and "The Crown" (sweeping period drama tracking the life of Queen Elizabeth II), just to name a few.
Randolph said Netflix keyed on an approach that trumped, at the time, one of the best data-gatherers in the business.
"Early on we recognized we were in a much better position to do this than Amazon, which was basing its recommendations on purchase decisions," Randolph said. "We were basing ours on what you told us you liked and it ended up being a much stronger signal."
Randolph, with over a half-dozen startups under his belt, has also delved into the world of investing in disruptive new businesses. He believes even with the profound changes and paradigm shifts that have accompanied the growth of the internet and now "smart" mobile devices, the world is still in the early days of digital innovation.
"There are millions of other things that can be connected and controlled in a way to improve people's lives," Randolph said. "Just look at Netflix … 130 million users should be seen as a numerator. The denominator is the number of internet-enabled people on the planet. The opportunities that are out there, for all innovators, have more than just an economic upside, they're going to be life-changing."
Randolph also had this piece of advice for those young women and men who may be taking their first steps on quests for entrepreneurial success.
"Take a pass on that chance to intern at Google," Randolph said. "Instead, go work for and eight-employee company with a smart CEO and watch how that person makes decisions.
You'll see a person who, every single day, has the discipline to get up, plug away at a problem and fail and change directions and plug away and fail and change directions. If you think that kind of drive and persistence is the coolest thing in the world, then you've found the right place to be."