November 15, 2004: Headlines: COS - Swaziland: Business: Silicon Valley: Computers: Internet: Hollywood Reporter: Reed Hastings earned his first fortune in 1997 by selling another company he founded, Pure Software, to rival Rational Software.

Peace Corps Online: Directory: Swaziland: Special Report: RPCV Reed Hastings: Reed Hastings: Archived Stories: November 15, 2004: Headlines: COS - Swaziland: Business: Silicon Valley: Computers: Internet: Hollywood Reporter: Reed Hastings earned his first fortune in 1997 by selling another company he founded, Pure Software, to rival Rational Software.

By Admin1 (admin) (pool-151-196-36-89.balt.east.verizon.net - 151.196.36.89) on Sunday, November 21, 2004 - 1:54 pm: Edit Post

Reed Hastings earned his first fortune in 1997 by selling another company he founded, Pure Software, to rival Rational Software.

Reed Hastings earned his first fortune in 1997 by selling another company he founded, Pure Software, to rival Rational Software.

Reed Hastings earned his first fortune in 1997 by selling another company he founded, Pure Software, to rival Rational Software.

Reed Hastings, NetFlix

By Paul Bond

The following profile appeared in the Nov. 15 Leadership in Hollywood issue as part of a collection of innovative industry voices.

WHO: Reed Hastings

WHAT: Founder and CEO, Netflix

WHY: Netflix pioneered the subscription movies-by-mail model, gaining a foothold inside consumers' homes, and bolstered its approach recently by teaming with TiVo to deliver movies digitally. Dismissed early in its five-year history as a money-burning dot-com with little hope for survival, Netflix now boasts more than 2.2 million subscribers who each pay about $18 a month. The company has plenty of cash in the bank and boasts lots of profits, and detractors have become emulators.

BACK STORY: Hastings earned his first fortune in 1997 by selling another company he founded, Pure Software, to rival Rational Software. He decided that same year to rewrite the rules of the movie rental industry. "On the way to a video store to return a long-overdue movie, knowing that my wife was going to excoriate me for such a late fee, I was thinking about the way a gym operates: $30 a month and unlimited workouts," Hastings says. "It's a good model for a video store, too." Apparently, video store operators agree: Everyone from Blockbuster to Wal-Mart has begun to emulate Netflix.

INNOVATIVE APPROACH: Netflix earned $5 million in revenue during its first year. "This year, we'll do over $500 million, all due to the power of eliminating late fees," Hastings says. Subscribers have DVDs -- housed in well-recognized red envelopes emblazoned with the company's logo -- delivered to their mailboxes. Subscribers keep three movies and get a new one delivered within a couple of days after they mail one back. The Netflix Web site also tracks what each subscriber likes and makes recommendations. "We take a risk," Hastings says. "We recommend the movies people truly want versus what they think they want, movies people might not have otherwise heard of but are very likely to enjoy."

LEADING EDGE: Hastings credits the success of Netflix to his determination not to be discouraged by naysayers. "Many people thought the Netflix model would not succeed," he says. "Blockbuster, which knows the rental business very well, didn't think it was a viable model until very recently." Netflix faces sudden competition not only from Blockbuster but also from Wal-Mart: Both retailers have flattered the company by imitating its model nearly to a T. "Conventional wisdom is often wrong," Hastings says. "The power of passionate belief is strong."

THE ROAD AHEAD: Netflix's agreement with TiVo calls for delivery of movies to digital video recorder hard drives, beginning next year. But Hastings acknowledges that consumers probably will not catch on immediately and predicts that DVDs will be even more ubiquitous in five years than they are today. He also predicts that Netflix will boast 5 million subscribers and $1 billion in annual sales by 2007 -- even as Wal-Mart and Blockbuster up the ante -- because Netflix has more titles available and gets its DVDs to subscribers more quickly than does its rivals. "As Starbucks is the passion brand in coffee, we're becoming the passion brand in movies," Hastings says.






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Story Source: Hollywood Reporter

This story has been posted in the following forums: : Headlines; COS - Swaziland; Business; Silicon Valley; Computers; Internet

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